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Citi lifts PayPal shares target on solid transition progress

EditorEmilio Ghigini
Published 10/06/2024, 10:14
© PayPal PR
PYPL
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On Monday, Citi has updated its outlook on PayPal Holdings Inc (NASDAQ:PYPL) shares, increasing the price target to $81 from the previous $79, while retaining a Buy rating on the stock.

The adjustment follows a meeting with PayPal's CEO and CFO, where the firm's transition to its "PayPal 3.0" strategy was discussed.

The financial institution's analysis indicates that PayPal is making commendable strides in its organizational structure, which is expected to enhance strategic execution.

Although some key product launches are still forthcoming, the detailed planning behind these products is believed to bolster confidence in their eventual execution.

Citi notes that PayPal's organizational advancements lay the groundwork for a growing product pipeline, whether through internal development or acquisitions. The emphasis will likely remain on maintaining focus and discipline throughout this growth phase.

Despite the necessity for PayPal to demonstrate further internal progress and execution, the analyst anticipates an improvement in investor sentiment. This optimism is based on a favorable setup for 2024, coupled with consistent product development that is projected to underpin future transaction profit growth.

The new price target reflects Citi's confidence in PayPal's ongoing transformation and its potential to achieve enhanced financial performance as a result of these strategic initiatives.

In other recent news, PayPal has been making significant strides in its business model. The company has seen its shares target raised by Mizuho due to stronger-than-anticipated payment trends and the potential benefits from the rollout of a product named Fastlane.

Mizuho's new revenue and transaction margin estimates for the year 2025 are now set at $34.6 billion and $14.81 billion, respectively.

PayPal also launched its PayPal USD stablecoin on the Solana blockchain, a move aimed at enhancing its functionality for digital commerce.

This development was complemented by the appointment of Mark Grether, a seasoned advertising industry executive, as Senior Vice President and General Manager of PayPal Ads.

Furthermore, PayPal maintained its shares target from JMP Securities amid the launch of its new advertising platform. The company also retained a Peerperform stock rating from Wolfe Research as it initiated its advertising business. These recent developments highlight PayPal's strategic moves to expand its business model and service offerings.

InvestingPro Insights

In light of Citi's updated outlook on PayPal (NASDAQ:PYPL), InvestingPro data and tips provide additional context for investors. PayPal's aggressive share buyback strategy is a notable management move, signaling confidence in the company's valuation and future prospects. Analysts have revised their earnings expectations downwards for the upcoming period, suggesting caution, yet the company's low P/E ratio relative to its near-term earnings growth presents an attractive valuation point.

The data shows PayPal with a market cap of $70.4 billion and a P/E ratio standing at 16.9. The PEG ratio, which measures the stock's price relative to its earnings growth, is remarkably low at 0.24, indicating potential undervaluation based on growth expectations. Additionally, PayPal's revenue growth remains solid, with an 8.39% increase over the last twelve months as of Q1 2024, underscoring the company's position as a prominent player in the Financial Services industry, as highlighted in one of the InvestingPro Tips.

For those looking to delve deeper, there are over 6 additional InvestingPro Tips available, providing a comprehensive analysis of PayPal's financial health and market position. Interested investors can gain further insights and save on a yearly or biyearly Pro and Pro+ subscription with the promo code PRONEWS24.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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