Home NewsStock Market News The stock price has halved and it is still the industry hegemon! PayPal reports earnings today, Wall Street is cautiously optimistic |

The stock price has halved and it is still the industry hegemon! PayPal reports earnings today, Wall Street is cautiously optimistic |

by WOOWinvest
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The stock price has halved and it is still the industry hegemon! PayPal reports earnings today, Wall Street is cautiously optimistic |


PayPal (PYPL-US) closed up 2.35% on Monday to $88.56 a share, and analysts are cautiously optimistic about its second-quarter earnings report on Tuesday (2nd).

PayPal was forced to cut its forecast earlier this year as it faced post-pandemic challenges, sending shares down more than 53% so far this year. However, it is precisely because the slump of more than 50% has created investment appeal that last week it was reported that activist hedge fund Elliott Management had taken a position in PayPal.

Wall Street is again excited about PayPal’s long-term prospects, but its short-term prospects are less optimistic, thanks to the entry of activist investors and its attractive valuation.

Analysts expected second-quarter revenue of $6.8 billion and earnings per share (EPS) of 46 cents, compared with an adjusted EPS estimate of 87 cents, according to a FactSet survey. In the year-ago quarter, PayPal had revenue of $6.2 billion and EPS of 1 cent, or $1.15 in EPS adjusted for a decline in eBay’s marketplace business.

With households more hesitant to spend as the economy weakens, analysts expect lower payment volumes, leading to lower PayPal’s adjusted EPS, but after overcoming near-term headwinds, Wall Street is upbeat on PayPal’s long-term outlook as the company remains a sizable A major player in the payments space.

Cheap shares also help, with PayPal currently trading at a price-to-earnings ratio of 20, well below its five-year average of 36.

DA Davidson analyst Christopher Brendler said on Monday: “We believe investors are overreacting to some short-lived headwinds, and while the coronavirus boost to performance has proven to be short-lived, PayPal remains a large player in the payments ecosystem. It is one of the most profitable businesses for merchants, and its consumer empowerment is also very valuable.”

At the end of the first quarter, PayPal had 429 million active accounts, up 9% from the same period last year. Brendler maintained a “buy” rating on the stock, but cut its price target by $11 to $120 a share.

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