Benzinga - by Anusuya Lahiri, Benzinga Editor.
Goldman Sachs analyst Will Nance assumed PayPal Holdings (NASDAQ:PYPL) with a Neutral rating and a price target of $69.
PayPal shares are near their lowest level since 2017, as the market has increasingly become worried about PayPal's competitive positioning in online payment processing and increasing competition from mobile and web-based wallets, which compete with PayPal's branded checkout experience, Nance noted.
While the analyst’s base case is for PYPL branded to continue to lag overall e-commerce growth in the near term while digital wallets are growing closer to mid-teens, he noted the market has already reflected this shift to a more at-market growth rate.
Also Read: PayPal Taps Walmart’s Srini Venkatesan as New CTO
However, there are numerous examples of long-held multiples rerating downwards when a company's long-term competitive positioning is called into question.
While Nance noted room on the cost side to maintain double-digit EPS growth, ultimately he remains cautious on branded checkout competitive dynamics longer term, as mobile-based wallets continue to gain share.
Thus, while Nance’s estimates are modestly above consensus, and he noted limited downside risk to consensus given the conservative guidance setup and numerous cost levers, he noted the risk that the multiple compresses further as branded checkout growth continues to lag.
PayPal remains one of the few ways to gain pure-play exposure to e-commerce within payments as per the analyst.
Nance projected fiscal 2024 revenue and EPS of $32.6 billion (prior $31.8 billion) and $4.28 (prior $5.12).
Price Action: PYPL shares traded lower by 1.42% at $59.75 at the last check on Monday.
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Latest Ratings for PYPL
| Mar 2022 | B of A Securities | Downgrades | Buy | Neutral |
| Feb 2022 | Mizuho | Maintains | Buy | |
| Feb 2022 | Barclays | Maintains | Overweight |
View the Latest Analyst Ratings
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