PayPal’s Rating Lowered to Neutral by Daiwa, Price Target Cut to $62
In a blow to PayPal, the renowned financial services firm, Daiwa has downgraded the company’s rating from Outperform to Neutral. In addition to this, the firm has also reduced its price target for the stock, setting it at $62 per share, down from the previous $64.
The decision comes after PayPal released its earnings report, which prompted Daiwa analysts to revise their forecasts for the company’s non-GAAP earnings per share (EPS). For 2024, the firm now predicts earnings of $5.16, a drop from the previous estimate of $5.61. Looking ahead to 2025, EPS is projected to be $5.56, with an expected increase to $6.18 in 2026.
“While the company’s guidance appears conservative, we remain cautious and are hesitant to factor in significant upside at this time,” said the Daiwa analysts. They added, “We will closely monitor quarterly earnings performance to gauge its potential for outperformance.”
According to these analysts, the key to PayPal’s future success lies in a return to a clear growth trajectory for transaction margin dollars and the realization of benefits from increased investments. Until these factors fall into place, it is difficult to envision substantial medium to long-term growth for the company. However, once these conditions are met, Daiwa believes that PayPal has the potential for strong profit growth.
Investors will be keeping a close eye on PayPal’s upcoming earnings reports, as they await signs of a resurgent growth trajectory for the company.
Analyst comment
Negative news. As an analyst, the market reaction to this news will likely be cautious, with a potential decrease in PayPal’s stock price in the short term. Investors will closely monitor PayPal’s quarterly earnings performance for signs of a resurgent growth trajectory before making any significant investment decisions.
