PayPal (PYPL) shares are in the spotlight on Friday morning after a senior Truist analyst, Matthew Coad, upgraded the financial technology giant to “Hold.”
In his research note, Coad raised his price objective on the digital payments pioneer as well to $57, implying a modest upside from current levels.
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PayPal stock has already been in a sharp uptrend in recent weeks, currently up roughly 45% versus its June low.
www.barchart.comTakeover Speculation Makes PayPal Stock Attractive
A major driver behind Truist’s improved outlook is the ongoing takeover speculation surrounding PayPal.
The firm’s analyst pointed to reports of acquisition interest from a consortium involving payments provider Stripe and private equity firm Advent International.
According to Coad, the interest from Stripe is “real,” and a combination of the two fintech firms will generate significant operational synergies. Even with PayPal Holdings’ board reading initial buyout proposals as inadequate, the presence of high-profile suitors creates a functional price floor under the stock.
Note that Barchart also currently holds a “24% BUY” opinion on PYPL shares, indicating technical momentum is beginning to turn in their favor as well.
What to Expect From PYPL’s Upcoming Earnings
Despite the recent surge, PayPal shares continue to trade at a rather attractive 1.48x sales, indicating much of the market’s skepticism regarding competition and margin compression is already baked in.
That said, Coad cautioned that PayPal’s turnaround under CEO Enrique Lores remains challenging, with potential downside revision risks should the company decide against a buyout.
The fintech giant is set to report its Q2 earnings next week on July 28. Consensus is for it to record $1.28 a share of earnings (EPS), which would represent an 8.57% decline on a year-over-year basis.
PYPL does, however, pay a small dividend yield of 1%, which makes it somewhat more attractive to own at current levels.
What’s the Consensus Rating on PayPal?
Other Wall Street analysts remain more cautious on PYPL stock, though.
According to Barchart, the consensus rating on PayPal Holdings sits at “Hold,” with the mean price target set at about $50, signaling potential downside of more than 10% from here.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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