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On Thursday, Piper Sandler adjusted its outlook on PayPal Holdings Inc . (NASDAQ:PYPL), reducing the price target to $76 from the previous $85 while maintaining a Neutral stock rating. The firm’s decision came after engaging in PayPal’s Investor Day, the first event of its kind since 2021. With the stock currently trading at $72.05 and a P/E ratio of 17.82, InvestingPro analysis suggests PayPal is trading below its Fair Value, while technical indicators show the stock is in oversold territory. During the event, PayPal’s management reiterated its financial guidance for fiscal year 2025, which was initially provided during the fourth-quarter 2024 earnings call. The company also introduced longer-term financial goals, looking ahead to fiscal year 2027 and beyond. According to InvestingPro data, PayPal has demonstrated solid financial performance with revenue of $31.8B and a healthy gross profit margin of 40.54%. Management’s commitment to shareholder value is evident through aggressive share buybacks, one of several key insights available in the comprehensive Pro Research Report.
PayPal anticipates achieving high-single-digit growth in transaction margin dollars by fiscal year 2027 and expects over 10% growth in the longer term. In addition, the company forecasts non-GAAP earnings per share (EPS) to increase in the low teens in FY27 and by at least 20% in subsequent years. These growth projections are based on several strategic initiatives including winning checkout, scaling its Omni platform, expanding the use of Venmo, and enhancing the profitability of its Payment Service Provider (PSP) business.
The company has set specific targets for fiscal year 2027, aiming for an annual branded checkout total payment volume (TPV) growth rate of 8%-10%, up from 6% in fiscal year 2024. Additionally, PayPal expects the annual person-to-person (P2P) and other consumer TPV growth rate to reach 10%, an increase from 7% in FY24. These targets are part of PayPal’s broader strategy to drive growth across various segments of its business.
Piper Sandler’s revised price target reflects the firm’s current assessment of PayPal’s growth prospects and market position. As the company continues to execute on its strategic plans, investors and analysts alike will be monitoring the progress towards the newly set financial targets for the coming years. With 18 analysts recently revising earnings estimates upward and analyst price targets ranging from $70 to $125, InvestingPro subscribers can access over 30 additional financial metrics and insights to make more informed investment decisions.
In other recent news, PayPal Holdings Inc. presented an optimistic financial outlook during its investor day, with goals that include a 10% growth in total payment volume and a more than 20% increase in earnings per share. TD Cowen maintained a Hold rating on PayPal with an $83 price target, recognizing the ambitious nature of these targets and emphasizing the importance of successful execution. RBC Capital Markets reiterated an Outperform rating with a $104 price target, focusing on PayPal’s transformation efforts and growth potential in total payment volume and adjusted earnings per share. Keefe, Bruyette & Woods also maintained an Outperform rating, highlighting PayPal’s strategic shift toward becoming a broader commerce platform. Bernstein, however, retained a Market Perform rating with a $94 target, noting the company’s position at a crossroads with potential for significant growth or challenges. Analysts have pointed out that PayPal’s initiatives, such as expanding its modern checkout offerings and leveraging its two-sided network, are crucial for future growth. The company’s transformation and market penetration efforts are seen as key drivers for its long-term strategy. Investors are closely monitoring PayPal’s ability to execute these strategic initiatives amid a competitive landscape in digital payments.
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