PayPal Jumps 5.5% As 4Q Sales Outperform; Street Sticks To Buy

Shares of PayPal Holdings gained 5.5% in Wednesday’s extended trading session after the payment platform provider’s fourth-quarter sales and earnings topped Street estimates.

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PayPal’s (PYPL) 4Q adjusted earnings of $1.08 per share grew 29% year-over-year and exceeded analysts’ expectations of $1 per share. The company’s 4Q sales of $6.12 billion beat the consensus estimates of $6.09 billion and rose 23% year-over-year, driven by higher payment volumes and the addition of net new active accounts.

The company’s total payment volume (TPV) grew 39% to $277 billion, while merchant services volume climbed 42%, and Venmo app’s TPV jumped 60%. The company added 16 million net new active accounts and ended the quarter with 377 million active accounts, marking a 24% year-over-year increase.

As for 2021, PayPal expects revenue to grow by about 19% to $25.5 billion and the momentum in TPV growth and net new active accounts to sustain. The company forecasted for adjusted earnings per share to increase by 17% this year.

For the first quarter, the company anticipates revenue growth of 28% and adjusted earnings growth of about 50% year-over-year. (See PayPal stock analysis on TipRanks)

On Feb. 3, BTIG analyst Mark Palmer maintained a Buy rating and a price target of $300 (19.1% upside potential) on the stock. In a note to investors, the analyst said, “while PYPL has been a clear outperformer during the COVID-19 pandemic as consumers have adopted digital payments at an unprecedented rate, the company’s very strong operating performance during FY20 occurred despite a steep decline in travel and event-related volumes, pointing to incremental upside as the pandemic’s impact abates.”

Overall, the Street has a bullish outlook with a Strong Buy consensus rating based on 16 Buys and 1 Hold. The average analyst price target of $273.12 implies upside potential of about 8.4% to current levels. That’s after shares rallied 121.2% over the past year.