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On Wednesday, Jefferies reiterated a Hold rating on PayPal Holdings Inc . (NASDAQ:PYPL), with a price target of $90.00, closely aligned with the current share price of $89.77. According to InvestingPro analysis, PayPal appears undervalued, with the company maintaining a "GOOD" overall financial health score.
The firm anticipates a robust beat in transaction margin dollars due to reduced transaction expenses, benefiting from a change in mix caused by Braintree's customer turnover. Jefferies also expects PayPal's branded Total (EPA:TTEF) Payment Volume (TPV) to accelerate in the fourth quarter, driven by faster market-level growth.
The analyst from Jefferies predicts that there won't be much surprise in the initial guidance, as the fiscal year 2025 targets have been previously detailed. The firm foresees a reaffirmation of growth expectations of over 4% excluding float and earnings per share (EPS) figures that align with current projections.
According to the firm, the branded TPV will once again become the key variable for transaction margin dollars in 2025. Jefferies believes that for PayPal's stock to improve, further acceleration in branded TPV is necessary.
The commentary from Jefferies suggests that while PayPal has outlined its long-term financial goals, the immediate performance of its branded TPV is crucial to the company's success. The firm's analysis indicates that the market has already factored in PayPal's strategic objectives for 2025, and investors are now looking for tangible growth in key areas to drive the stock's performance.
PayPal's focus on maintaining a solid transaction margin while navigating customer churn at Braintree—a mobile and web payment systems company owned by PayPal—highlights the company's efforts to optimize its expense structure and improve profitability.
Jefferies' rating and price target for PayPal remain unchanged as the firm monitors the company's progress towards accelerating branded TPV growth and achieving its outlined financial targets for the coming years.
In other recent news, PayPal has been in the spotlight for various reasons. Analysts from Susquehanna have raised their price target on PayPal, maintaining a positive rating due to the company's consistent financial performance and potential for sustained mid-single-digit growth. Similarly, Keefe, Bruyette & Woods (KBW) has expressed optimism about PayPal's ability to surpass gross profit growth expectations for 2025.
However, PayPal is also facing a lawsuit alleging racial bias in its investment program, which has allegedly cost businesswoman Nisha Desai and her venture capital firm millions of dollars.
On a brighter note, an RBC analyst has highlighted a positive shift in the sentiment of American small and medium-sized businesses, which is expected to boost technology investments in areas such as Payments, Processors, and IT Services. The analyst named PayPal as a potential beneficiary of this trend.
Lastly, Macquarie has maintained an Outperform rating on PayPal and raised its price target, reflecting optimism about the company's stablecoin, PYUSD. This development, along with PayPal's strategic plans to leverage its operations and innovate with its branded checkout options, positions the company for potential growth.
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