Analysts slashed their price targets on PayPal Holdings Inc (NASDAQ:PYPL) following dismal Q4 results.
- JPMorgan analyst Tien-tsin Huang lowered the price target to $190 from $272 (44.7% upside) and kept an Overweight.
- The company's guidance was "broadly disappointing, but probably necessary to reset expectations in order to get back to beating and raising expectations."
- The analyst cut estimates but still sees PayPal emerging "from this air pocket" with growth approaching 20% exiting fiscal 2022.
- Morgan Stanley analyst James Faucette lowered the price target to $190 from $217 and kept an Overweight.
- He thinks "modestly weaker-than-expected" results of the past couple of quarters are attributable primarily to uneven, disappointing e-commerce growth, complicated by tough year-over-year comps and supply chain disruptions.
- However, Faucette thinks investors are "probably overly preoccupied" by the reduced emphasis on NNA growth and instead should focus on overall e-commerce growth.
- However, he admits e-commerce market growth normalization could take several quarters to play out.
- Credit Suisse analyst Timothy Chiodo lowered the price target to $190 from $250 and kept an Outperform.
- The analyst notes an altered approach combined with near-term pressures results in a disappointing fiscal 2022 outlook.
- The analyst adds that PayPal backed off its original five-year growth targets and now expects a slightly more pressured 2022 versus prior expectations provided on the Q3 earnings call, alongside a resumption of previous guided trends in the out years with a seemingly increased focus on profitability and engagement.
- While PayPal remains a unique near pure-play e-commerce platform with a 2-sided network and is among a limited handful of mega-cap companies with its level of top-line compounding potential over the coming years, the near-term pressures, strategy change, and guidance reduction means PayPal shares will be largely dependent on signs of acceleration in Q2, Q3, and exiting the year.
- Raymond James analyst John Davis downgraded to Market Perform from Outperform without a price target.
- PayPal's Q4 print included a 2022 outlook that will send estimates lower, and Davis believes the medium-term outlook laid out a year ago at the analyst day for a 20% revenue/22% EPS CAGR through 2025 is more than aspirational at this point.
- He feels the stock is fully valued and is moving to the sidelines as he believes shares will be range-bound from here.
- JMP Securities analyst David Scharf lowered the price target to $198 from $260 (50.8% upside) but kept an Outperform.
- The results were below expectations on a user metric basis, specifically in "net new accounts," as the company pivoted to focus on user engagement over absolute account growth.
- Scharf adds, however, that he remains positive on the stock given its "most comprehensive" position in the two-sided digital payments ecosystem, its upcoming catalysts such as the Amazon.com Inc (NASDAQ:AMZN) checkout, and his view of headwinds being "transitory."
- Wedbush analyst Moshe Katri lowered the price target to $170 from $220 and kept an Outperform.
- The analyst still believes the second half of 2022 year-over-year comps will benefit from the elimination of eBay Inc (NASDAQ:EBAY) from overall comps, more favorable comps, as well as possible cross-border travel recovery.
- Price Action: PYPL shares traded lower by 25.32% at $131.29 on the last check Wednesday.
