![]() ![]() Valuation - Now Beyond Cheap, and It's RidiculousĬonsensus revenue estimates have come down during the slowdown phase, but we're seeing PayPal surpass the recent projections. As the stock is around $64 now, the average estimate provides around 58% of potential upside over the next twelve months. While we have a relatively broad price range for PayPal, the average one-year price target is approximately $101 on the stock. There are no sell or strong sell ratings on the stock. analysts covering PayPal, 23 have it rated as a strong buy, 11 as a buy, and 13 as a hold here. Fortunately, this nonsensical dynamic provides a substantial buying opportunity here. Chiodo when the stock dropped 80%? In my view, downgrading PayPal's stock from a buy to hold down here is pointless and misleading. However, Chiodo could become more constructive on the shares if he sees the "potential for a resumption of more meaningful total company gross profit growth in 2024 and beyond."Īm I the only one who sees a problem here? First, who downgrades a stock when it's around a 52-week low? Second, the stock price is close to $60, and the analyst's "downgraded" price target is $85, roughly 33% above PayPal's current price. Chiodo cites margin pressure and other variables affecting profitability in the near term. ![]() Let's ask Credit Suisse Group AG ( CS) analyst Timothy Chiodo, who downgraded the stock to a hold, lowering his price target to $85 (still a 33% upside from here). So, Why is the Stock Tanking Instead of Surging, You Say? At 13 times this year's EPS estimates and 11 times 2024 EPS projections, PayPal's stock is remarkably cheap, and its multiple should increase with the company's stock price in future years and quarters. ![]() As the slowdown moderates and the macroeconomic condition improves, PayPal should return to low double-digit revenue growth, and the company's EPS should continue increasing substantially in the coming years. Now PayPal is beating estimates, and this dynamic could continue as we advance. The Takeaway - The market became too bearish on PayPal Holdings, Inc., and sales and earnings revisions decreased too much. Furthermore, PayPal raised its full-year 2023 EPS growth guidance from 18% to 20%, bringing the anticipated full-year EPS number to $4.95 vs. The company's better-than-expected results materialized due to robust growth in the e-commerce industry and effective cost-cutting measures. Also, the company beat revenue estimates, growing sales by 8.3% YoY to $7.04B. PayPal delivered non-GAAP EPS of $1.17 vs. Nevertheless, the company's recent earnings came in better than expected. Like most companies today, PayPal is going through a temporary slowdown and decreased profitability phase due to external economic challenges. This phenomenon implies that investors and traders are dumping the stock, despite a possible bottom being near. The latest wave of selling appears like irrational panic selling, reminiscent of capitulation in PayPal's stock. The RSI, CCI, full stochastic, and other technical indicators illustrate that PayPal's stock is extensively oversold, likely has minimal downside, and has a high probability of recovering and moving much higher in the intermediate and long term. Most recently, PayPal dropped to a new multi-year low at about $62-63. PayPal's stock has been trading sideways and slightly lower over the last year. We see that much of the meltdown occurred during a year-long bear market from July 2021 to July 2022. From A Technical Standpoint - PayPal Is A Buy It's ridiculous, and I am using this remarkable buying opportunity to accumulate shares for the long haul. PayPal has a strong probability of continuing to increase revenues at double-digits, providing significant EPS growth and enabling its stock price to rise substantially in the coming years. Despite the company's temporary challenges, PayPal remains a high-growth candidate, and its stock price is now at a meager 11 times the consensus forward EPS estimate. ![]() Nevertheless, instead of rallying, PayPal's stock dropped like a rock to a new multi-year low after its earnings results, primarily due to a downgrade from the experts at Credit Suisse Bank. Furthermore, PayPal's recent earnings beat estimates, and the company provided solid guidance, given the challenging economic atmosphere. PayPal's fundamentals remain robust even as the company battles through the overall slowdown process. However, the drop in PayPal's stock has brought its share price down to an absurd level. Yes, PayPal was overbought and overvalued around its highs. Can you believe that PayPal's stock peaked at more than $300 in 2021 and has dropped by a whopping 80% since then? ( NASDAQ: PYPL), doubling down on the stock in my All-Weather Portfolio, bringing my average price per share paid to approximately $70. I recently increased my stake in PayPal Holdings, Inc. ![]()
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