JMP boosts PayPal share price target, cites stabilization and beatable 2024 guidance

JMP boosts PayPal share price target, cites stabilization and beatable 2024 guidance
Credit: © Reuters.

On Wednesday, JMP Securities adjusted its price target for PayPal Holdings Inc . (NASDAQ: PYPL ) shares, increasing it to $70.00 from the previous $68.00, while reaffirming a Market Outperform rating. The firm's analysis indicates that PayPal's shares performed comparably to the Nasdaq index during the first quarter.

The analyst noted signs of initial stabilization in PayPal's gross profit margins, despite a continued shift away from its branded checkout services. This stabilization, along with the new CEO Alex Chriss's guidance for 2024, which has been deemed potentially beatable by investors, contributed to the positive outlook. The forecast for flat Transaction Margin dollars was highlighted as possibly conservative, suggesting that upcoming financial reports could surpass expectations.

JMP Securities highlighted that management's commentary pointed to potential increased contributions from PayPal's branded checkout, PPCP, and Braintree due to new product initiatives launched in the previous quarter. These factors are seen as potentially beneficial for the company's financial performance.

The guidance for 2024 also accounts for some temporary challenges, such as the impact of credit normalization on revenue share arrangements from off-balance sheet loan purchases and a potential slowdown in interest income growth on customer deposits due to anticipated rate cuts.

These headwinds are expected to be temporary and may lead to a shift in investor sentiment towards mid-year, as projections for a return to normalized EPS growth in 2025 become more apparent.

InvestingPro Insights

As PayPal Holdings Inc. (NASDAQ:PYPL) navigates through its current market position, real-time data from InvestingPro provides further context to JMP Securities' recent price target adjustment. PayPal's management has been actively engaging in share buybacks, signaling confidence in the company's value proposition and future prospects. This strategic move aligns with the company's trading at a low P/E ratio of 16.52, which, when compared to its near-term earnings growth, suggests that the stock may be undervalued.

In addition, PayPal's status as a prominent player in the Financial Services industry, coupled with analysts' predictions of profitability this year, underscores the company's robust standing in the market. Despite not paying a dividend, PayPal's significant revenue growth over the last twelve months, with an 8.19% increase and a gross profit margin of 39.59%, reflects its ability to generate earnings efficiently. Moreover, the company's operating income margin of 16.31% further demonstrates its operational effectiveness.

For investors seeking a deeper dive into PayPal's performance metrics and strategic insights, InvestingPro offers additional InvestingPro Tips that can help in making more informed investment decisions. There are currently 5 additional tips available on InvestingPro, and users can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. These insights could provide valuable perspectives as PayPal continues to evolve and adapt to market dynamics.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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