JPMorgan (NYSE:JPM) has upheld its Overweight rating and $77.00 price target on PayPal Holdings Inc . (NASDAQ: NASDAQ:PYPL) in view of PayPal's second-quarter results, which surpassed the elevated expectations set after the first-quarter earnings.
The company experienced a significant share price increase on Wednesday, in contrast to a decline in the broader S&P 500 index.
PayPal's transaction margin dollar (TMD) growth accelerated to 8%, a notable rise from the 4% growth observed in the first quarter. This improvement was attributed to a variety of factors, including a better contribution from Braintree and consistent, favorable trends in Branded checkout performance.
The payment service provider's volume growth slowed down to 19%, which was seen as a positive outcome of the company's strategy to prioritize TMD contribution over volume share.
The company's financial stability has been bolstered by the float, contributing three percentage points to the year-to-date TMD growth of 6%. Despite this, JPMorgan anticipates some slowdown in the second half of the year.
Nevertheless, the firm is optimistic about PayPal's direction towards fostering profitable revenue growth, highlighted by the anticipated general availability of Fastlane next month, well ahead of the holiday season, and the momentum surrounding Venmo.
Looking forward to the fiscal year 2025, JPMorgan projects a one percentage point acceleration in TMD growth to 5%, which could translate into an 11% growth in adjusted earnings per share (EPS).
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