An analyst from UBS quoted a consumer survey done by the bank at the recent DecemUBS TMT Conference which noted that "36% of Buy Now, Pay Later users chose PayPal's Pay In Four as the most often used BNPL product." Therefore, if the penetration rate of BNPL grows at a faster pace, this will be a tailwind for PYPL. PYPL holds the leading position in BNPL, a growing segment of the payments market. The second catalyst for PayPal is a faster-than-expected increase in the adoption rate of BNPL (Buy Now, Pay Later). If PayPal is able to prove to the market that it is able to maintain and gain market share going forward, this will definitely help to push its stock price up. PYPL's first catalyst is stronger-than-expected market share gains.ĭeutsche Bank ( DB) issued a research report (not publicly available) titled "Is PYPL Losing Market Share?" on November 16, 2022, which highlighted that investor "attention has turned to the question of whether PYPL's core business is maintaining or losing market share." It is reasonable to assume that this is one of the key investor concerns for PayPal that led to sell-side analysts lowering their respective target prices and investment ratings for the stock.Īt UBS' ( UBS) 50th Annual Global TMT Conference on December 7, 2022, PayPal addressed the issue of market share by revealing that the company "held or slightly grew (market) share" in 2022 year-to-date based on its TPV (Total Payment Volume) data and industry research. I am of the view that PayPal has two key catalysts worth watching out for in 2023. ![]() In the next section, I touch on potential catalysts which could possibly change Wall Street's perception of PayPal in a positive way. In the same time frame, the median analyst target price for PayPal was cut by -62% from $273.50 to $104.50 based on S&P Capital IQ data. PYPL's consensus sell-side analyst rating has declined from 4.36 (with 1 equivalent to a Strong Sell, and 5 representing a Strong Buy) as of the end of the prior year to 4.11 now. ![]() The analysts believe that PayPal isn't as attractive an investment candidate as it was a year ago, and their beliefs about PYPL are incorporated into the stock's investment ratings and price targets. Investors should watch out for the potential of PYPL reporting above-expectations earnings, and the realization of other key catalysts such as market share gains. I continue to assign a Buy rating to PayPal, as I see PYPL's shares outperforming in 2023. In this latest write-up, my focus is on PayPal's outlook in the coming year. ![]() I reviewed PayPal's Q2 2022 financial performance and assessed PYPL's share price recovery potential with my earlier Augupdate for the company. I maintain a Buy investment rating for PayPal Holdings' ( NASDAQ: PYPL) shares.
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