PayPal's Future Growth Prospects Remain Promising Despite Muted Web Traffic

Mizuho's Dan Dolev lowered their price target on PayPal (NASDAQ: PYPL) by 21.7% from $92 to $72 on 2023/11/14. The analyst maintained their Strong Buy rating on the stock.

According to Dolev, PayPal's dominance in the Branded Checkout segment continued in October 2023. The analyst cited Mizuho's e-commerce checkout data, which showed that "outgoing web traffic from key merchants remains below historical levels." This indicates that Apple Pay hasn't been able to surpass PayPal in this segment.

However, Dolev also noted that PayPal's web traffic from Temu, which was a positive catalyst in Q3 2023, appeared "more muted" in October. Despite this, the analyst believes that PayPal's future growth prospects remain promising. Dolev pointed to the "ample" opportunities to combine the PayPal and Venmo platforms to create a global digital wallet. This move, according to the analyst, could address concerns about market share losses to Apple Pay.

Looking at PayPal's Q3 2023 earnings report, the company beat expectations. The earnings per share (EPS) came in at $1.30, beating the Zacks Consensus Estimate of $1.22 and showing a 20.4% increase compared to Q3 2022's EPS of $1.08. Revenue for the quarter was $7.42 billion, exceeding the Zacks Consensus Estimate of $7.39 billion and showing an 8.4% increase year-over-year.

In addition to the earnings report, PayPal announced the appointment of Jamie Miller as CFO, effective November 6, 2023. Looking ahead, PayPal's management provided guidance for Q4 2023, expecting an EPS of $1.36 and year-over-year revenue growth of 6% to 7%. For the full year 2023, the company expects an EPS of $4.98.

PayPal's President & CEO, Alex Chriss, expressed confidence in the company's assets and market position. Chriss emphasized the need to harness these strengths and prioritize the organization's most important goals. The CEO also highlighted the company's focus on becoming more efficient, enabling innovation and executing with higher velocity. Chriss sees great potential in driving greater impact for customers and unlocking profitable growth.

On November 14, 2023, Mizuho analyst Dan Dolev also made a rating adjustment for Fleetcor Technologies Inc. The analyst lowered their price target by -4.1%, from $245 to $235, while maintaining a Hold rating on the stock.

Overall, 62.5% of top-rated analysts currently rate PYPL as a Strong Buy or Buy, while 37.5% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that PYPL's upcoming year will deliver earnings per share (EPS) of $3.83. This would represent a 13.7% increase on a year-over-year basis if the analysts' predictions prove accurate.

Since PayPal's latest quarterly report on November 1, 2023, the stock price has increased by 5.3%. However, on a year-over-year basis, the stock is down 39.2%. During this period, PayPal has trailed the S&P 500, which is down 13.6%.

It is worth noting that Mizuho analyst Dan Dolev is ranked in the bottom 1% out of 4,395 Wall Street analysts by WallStreetZen. Dolev specializes in the Industrials and Basic Materials sectors, among others.

PayPal Holdings, Inc. operates a technology platform that enables digital payments for merchants and consumers worldwide. The company offers various payment solutions under brands such as PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy. With its payments platform, PayPal allows consumers to send and receive payments in around 200 markets and 100 currencies. Additionally, users can withdraw funds to their bank accounts in 56 currencies and hold balances in their PayPal accounts in 25 currencies. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California.

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