It has been a rough stretch for PayPal (PYPL) stock. The share price currently sits almost 40% below the all-time high achieved in July, marking the pullback as the biggest decline since being spun off from eBay in 2015.
The lackluster performance is due to a combination of factors, including a mixed Q3 report and tech stocks getting hit hard in the currently volatile environment.
The stock might be underperforming but going by comments made by management in a recent meeting with Wolfe Research analyst Darrin Peller, the company appears confident it will meet its mid-term targets.
PayPal is aiming for 2025 revenue of “at least” $50 billion. It plans on reaching the goal via a “variety of paths around higher user counts and/or engagement.” Given customers choose to use PayPal only 50% of the time when available, CFO John Rainey noted there’s a lot of room to “increase its share of checkout” with its customers.
The company also has an “aspirational” target of 750 million NNAs (Net New Active Accounts) and noted that the “underlying growth assumptions” of 15% year-over-year, are compatible with NNAs’ growth seen over the last few years.
In the here and now, Rainey noted that Q4 trends started out “relatively strong.” A look at PayPal’s website traffic data confirms this take. Unique visitors between September and October increased by 4.49% from 231.3 million to 241.7 million and shot up even more between October and November – to 259.3 million, amounting to a 7.27% sequential uptick. The company has put the strong showing so far down to holiday shopping starting earlier than usual due to fears around the ongoing supply chain issues.
“Overall,” said the 5-star analyst, “Management continues to see the quarter shaping up to be in-line relative to guidance issued at its earnings call last month.”
Looking ahead to next year, in 1H22, the company expects to still see some “lapping impacts from eBay” – starting in June 2021, eBay began paying sellers directly rather than through PayPal – but that it should see out 2022 at a revenue growth rate “at or above its medium-term guide.”
Down to the nitty-gritty then, what does it all mean for investors? Peller reiterated an Outperform (i.e., Buy) rating for PYPL stock and has a $250 price target for the shares, suggesting they will move 34% higher over the coming months. (To watch Peller’s track record, click here)
Looking at the consensus breakdown, based on 25 Buys, 5 Holds and 1 Sell, the analyst consensus rates this stock a Strong Buy. Moreover, the forecast calls for one-year gains of 47%, given the average price target clocks in at $274.34. (See PayPal stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
