Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Tuesday, JPMorgan reaffirmed its confidence in PayPal Holdings Inc (NASDAQ:PYPL), maintaining an Overweight rating and a price target of $90.00. Currently trading at $64.93, InvestingPro analysis suggests PayPal is undervalued, with the stock showing a GOOD overall Financial Health Score. The firm’s assessment followed PayPal’s first-quarter results, which surpassed both the JPMorgan and broader market expectations, as well as the company’s own guidance.
PayPal reported a 4% increase in branded volumes, a slight deceleration from the 6% growth observed in the previous quarter but steady when accounting for the extra day in a leap year. This figure was just shy of JPMorgan’s estimate of a 5% rise and slightly below what investors anticipated. The company’s broader revenue growth stands at 6.81% over the last twelve months, with a healthy gross profit margin of 40.54%. Transaction (JO:NTUJ) margin dollars saw a 7% increase, exceeding the forecasted range of 4-5%. (InvestingPro subscribers have access to 8 additional key insights about PayPal’s financial performance and market position.)
The financial services company also delivered a stronger-than-expected earnings per share (EPS), beating estimates by $0.17, attributed to better margins and tax rates. With a current P/E ratio of 16.04 and trailing twelve-month EPS of $3.99, PayPal continues to demonstrate solid profitability metrics. The company reiterated its fiscal year 2025 transaction margin dollars (TMD) and EPS guidance, which JPMorgan interprets as a positive move to mitigate second-half risks, considering the first-quarter performance and second-quarter guidance that are both above market expectations.
Despite the potential for modest underperformance in PayPal’s shares due to the slightly weaker branded volume trends, JPMorgan views the updated guidance for the latter half of the year as a protective measure in light of the prevailing economic uncertainty. The firm is looking forward to updates on macroeconomic trends, which could further influence PayPal’s performance.
In other recent news, PayPal Holdings Inc. reported its first-quarter 2025 earnings, exceeding analysts’ expectations for earnings per share (EPS) but slightly missing revenue forecasts. The company posted an EPS of $1.33, surpassing the anticipated $1.16, which represents a 23% year-over-year increase. However, revenue came in at $7.8 billion, just below the projected $7.84 billion. Despite the revenue shortfall, PayPal demonstrated robust performance with a 3% growth in Total (EPA:TTEF) Payment Volume to $417 billion. The company is also expanding its product offerings, including AI and digital currency initiatives, which could position it well in the competitive landscape. Analysts from firms like JPMorgan and Mizuho (NYSE:MFG) noted the company’s strategic focus on branded experiences and omnichannel commerce as key growth drivers. PayPal’s strategic initiatives are designed to improve profitability, with non-GAAP EPS expected to range between $4.95 and $5.10 for the full year. The company also plans $6 billion in share buybacks and anticipates full-year free cash flow between $6 billion and $7 billion.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.