Here’s what Wall St. experts are saying about PayPal ahead of earnings

PayPal (PYPL) is scheduled to report results for its third fiscal quarter before the market opens on October 29, with a conference call scheduled for 8:00 am EDT. What to watch for:

Click here to check out PayPal’s recent Media Buzz Sentiment as measured by TipRanks.

BULLISH ON PROSPECTS: On Monday, Monness Crespi raised the firm’s price target on PayPal to $110 from $95, while keeping a Buy rating on the shares. Despite a greater than 25% run-up since the Q2 report, the firm remains “bullish on PayPal’s prospects,” citing what it calls a “prudently conservative streak for guidance” early in this management team’s tenure, the firm’s intra-quarter checks, and its expectations around a transaction margin dollar growth upward revision cycle.

Back on October 18, Citi raised the firm’s price target on PayPal to $94 from $83, maintain a Buy rating on the shares. The firm said conditions for continuation of positive sector performance remain in place for the FinTech group heading into the Q3 reports. Citi believes a relatively benign macro environment thus far, steady-to-lower rates, more even fund flows, improving sentiment regarding larger-cap multiple ceilings and transitions, and further profitability ramps can better support stock valuations. The firm’s stock preferences “shift further along the risk spectrum, which corresponds to the new sector phase.”

That same day, Stephens also raised the firm’s price target on PayPal to $85 from $75, while keeping an Equal Weight rating on the shares. Given decelerating, yet relatively stable, payment volumes and a challenging competitive backdrop, positioning in the payment space remains defensive, with a bias towards names with growing value-add service contributions and share-gainers, the firm tells investors in a preview for the group. In the absence of macro acceleration, the firm expects variability in returns across the space to stay elevated, with valuations remaining below historical levels, Stephens added.

MOVING TO THE SIDELINES: Earlier this month, Bernstein downgraded PayPal to Market Perform from Outperform with a price target of $80, up from $75. The firm noted its price target does not represent upside given the stock price performance recently. While PayPal’s product velocity is improving, Bernstein remains worried about competitive pressures on the “cash-cow core button, which often is still richly priced” versus peers. The firm also worries about Venmo’s share losses in peer-to-peer.

EXPECTATIONS: Last quarter, PayPal reported earnings of $1.19 per share on revenue of $7.89B. The company also raised its 2024 guidance and increased share repurchases. President and CEO Alex Chriss said at the time, “PayPal delivered a strong second quarter and first half, and I’m confident we’re on the right track. We delivered our best transaction margin dollar growth since 2021, and we are making steady progress on our strategic transformation, while investing in innovation and operating more efficiently. Given the strength of our business, we are raising our 2024 guidance and increasing share repurchases. We are operating from a position of strength, delivering for our customers, and focusing on long-term profitable growth.” For Q3, PayPal said it saw adjusted EPS growth in high single digits and revenue growth in mid-single digits.

Current consensus EPS and revenue forecasts for PayPal’s third quarter stand at $1.07 and $7.88B, respectively, according to data from Yahoo Finance. The consensus EPS and revenue forecasts for PayPal’s full year 2024 stand at $4.46 and $31.93B, respectively.