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On Thursday, Keefe, Bruyette & Woods provided insights on Paypal Holdings Inc. (NASDAQ:PYPL) in anticipation of the company’s upcoming investor day in New York City on February 25. Analysts at the firm expressed a positive outlook for the payment giant, emphasizing the potential for growth and the importance of the event for the new management team to outline their strategy and vision.
The recent fourth-quarter results and the 2025 outlook for Paypal had led to a decline in the stock price, as investor expectations were not met. However, Keefe, Bruyette & Woods suggested that taking a longer-term view of the business yields an optimistic perspective. They pointed out that the new management team, which has been in place for just over a year, has been diligently working on a number of initiatives including the modernization of the PayPal checkout experience, Fastlane, Venmo monetization, PayPal Credit products (PPCP), and Buy Now Pay Later (BNPL) services.
Analysts expect the investor day to provide a more detailed overview of these initiatives and how they will contribute to accelerating the company’s growth in the coming years. A key area of focus will be branded Total (EPA:TTEF) Payment Volume (TPV), which is Paypal’s most profitable revenue stream and a crucial factor for improving growth prospects. Despite concerns over market share due to a lack of acceleration in branded TPV growth, the U.S. TPV did see an uptick in the fourth quarter, with positive trends continuing into January.
Further attention will likely be given to Fastlane, a product launched last year targeting guest checkout, which has received positive early feedback from clients. Although its contribution to 2025 figures is expected to be minimal, it is anticipated to become a more significant growth driver in 2026 and beyond. The company’s strategy and expectations regarding its BNPL offerings, which currently represent a small portion of overall TPV but are among the fastest-growing segments, will also be addressed.
Finally, the firm anticipates that Paypal’s management will provide some visibility into the medium-term growth profile of the company, including expectations for Gross Profit (GP) growth and operating expense (opex) growth over a three-year period. Keefe, Bruyette & Woods conjectures that the medium-term growth profile will likely include some acceleration relative to the 2025 outlook, potentially reflecting high-single-digit GP growth with low to mid-single-digit opex and mid to high teens Earnings Per Share (EPS) growth. This forecasted growth profile is seen as attractive at current valuations, provided the management can convincingly demonstrate their ability to achieve these targets.
In other recent news, PayPal Holdings Inc . has been the focus of several analyst reports and strategic evaluations. Mizuho (NYSE:MFG) Securities discussed PayPal’s potential revenue growth through its new advertising platform, suggesting a possible 5-10% increase in total revenue. Despite reducing its price target from $100 to $96, Mizuho maintained an "Outperform" rating, citing optimism about PayPal’s transaction margin growth and upcoming initiatives like Fastlane and PayPal Everywhere. Meanwhile, RBC Capital Markets raised its price target for PayPal from $100 to $104, maintaining an "Outperform" rating, while noting concerns over PayPal’s market share dynamics due to mixed signals from recent Total Payment Volume growth figures.
Goldman Sachs has reaffirmed a "Neutral" rating with a $90 price target, highlighting the competitive challenges PayPal faces from other digital wallets like Apple (NASDAQ:AAPL) Pay and Google (NASDAQ:GOOGL) Pay. The firm anticipates that PayPal’s upcoming analyst day will offer crucial insights into its strategies for sustaining relevance in the evolving payments landscape. Citi analyst Ashwin Shirvaikar increased PayPal’s price target slightly from $97 to $98, maintaining a "Buy" rating despite noting concerns over branded volume growth and competitive pressures. Shirvaikar expressed confidence in PayPal’s transaction margin and earnings per share trajectory by 2025, suggesting a favorable outlook heading into the analyst day.
Investors are keenly awaiting PayPal’s analyst day, where the company is expected to address these competitive challenges and outline its strategic plans. With various initiatives in the pipeline, PayPal’s leadership is anticipated to provide clarity on its future growth trajectory. The company’s recent developments have sparked significant interest among analysts and investors, who are eager to see how PayPal plans to navigate the competitive digital payments market.
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