PayPal negative investor sentiment could lead to an opportunity

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PayPal negative investor sentiment could lead to an opportunity - Oppenheimer

Published Mar 08, 2023 21:12

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PayPal negative investor sentiment could lead to an opportunity - Oppenheimer

PYPL

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By Sam Boughedda

Oppenheimer analysts told investors in a research note Wednesday that PayPal (NASDAQ:PYPL) "could be a 15% EPS compounder."

The analysts, who have an Outperform rating and a $90 per share price target on the stock, acknowledged that the current investor sentiment on PayPal "isn't great." However, they believe this could lead to an opportunity.

"PYPL's not a safety trade if the market/payment stocks continue correcting. Yet today's analysis suggests PYPL still resides in fast-growing swim lanes (Ecom) and geographic regions that suggest a ~15% EPS LT compounder even with 1–2% market share pressure and ~3bps per year take rate pressure," they wrote.

The analysts believe that investors should think again about PYPL's prospects over the long term, given valuation and consensus expectations for long-term growth.

"PYPL's execution is key, but many underlying fundamental market tides are moving in its favor," they added.

"Underlying market growth to PYPL's mix of revenue, we see double-digit top-line growth and focus on ~1% adjusted operating margin expansion with buybacks. PYPL's revenue is ~43% international with some regions down 15–18% in 2022 USD equivalent. Some market share loss worries could actually be underperforming regions."

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