On Tuesday, Barclays reaffirmed its Overweight rating on PayPal Holdings Inc (NASDAQ:PYPL) with a steady price target of $81.00. The firm's analysis suggests that PayPal may exceed its transaction margin dollar (TMD) growth guidance for the year. This optimism is based on several factors expected to contribute positively to PayPal's performance.
The analysis by Barclays dissects PayPal's total payment volume (TPV) to identify specific product-level growth drivers. Two models were developed to forecast PayPal's TMD growth. The first aligns with PayPal's forecast for flat TMD growth in fiscal 2024, while the second presents a more optimistic scenario that could lead to approximately 300 basis points of TMD growth upside.
Key levers identified include PayPal's Pay with Venmo (PPCP) service, higher yields from Braintree's new offerings such as Fastlane, updates to the consumer app, and increased rates. These factors are anticipated to propel PayPal's TMD growth beyond the company's current guidance.
The report also indicates that current U.S. eCommerce trends and interest rate movements are favorable for PayPal's first-quarter volumes. Additionally, the prevailing "higher for longer" economic narrative is expected to bolster stronger-than-anticipated outcomes for PayPal's Online Virtual Auction Services (OVAS) in the first quarter, potentially impacting fiscal 2024 guidance.
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