By Senad Karaahmetovic
A Susquehanna analyst moved to the sidelines on PayPal (NASDAQ:PYPL) shares as he sees margins being negatively impacted by Braintree’s increasing share within PayPal’s Total Payment Value (TPV).
This “negative leverage” also prompted him to cut the price target to $100 from $115 per share.
“Piecing together intermittent disclosures, we estimate that Braintree accounted for 31% of PYPL's TPV in 2021 and may reach 44% by 2023E, contributing roughly 72% of PYPL's overall volume growth next year. As Braintree is likely to continue driving PYPL as a whole, its unit economics may drag on PYPL consolidated results,” he warned investors in a client note.
The analyst also claims that the market is underestimating these impacts on PYPL while valuation is also not helping as PYPL shares trade over 35% off the lows.
Moreover, the analyst is also concerned by the fact that FedEx (NYSE:FDX) withdrew its guidance recently.
“Given PYPL's high international exposure we note potential for weakness in shopper trends and PYPL's TPV,” he concluded.