PayPal Stock Rises 4% Following Upgrade to Buy; Truist Highlights M&A Flexibility

By Senad Karaahmetovic

Shares of PayPal have risen by nearly 4% today following an upgrade by analysts at Truist Securities, who moved their rating from Hold to Buy.

The analysts also increased their price target for the stock from $75 to $95 per share, indicating a potential upside of over 30% compared to Friday’s closing price. Despite current negative sentiment regarding PayPal’s long-term organic revenue growth, the analysts point to a "resurgent eCommerce" landscape as a positive factor.

They stated, "Importantly, street revenue growth estimates now reflect this outlook, contrasting last year when estimates significantly lagged behind consensus. While current macroeconomic challenges impact eCommerce volume and revenue growth, we believe eCommerce will capture market share from traditional card-present transactions."

The analysts expressed renewed confidence that revenue estimates are "reasonable." They also highlighted expectations for above-consensus earnings per share (EPS) in 2023 and 2024, flexibility in mergers and acquisitions as well as stock buybacks, potential leadership changes, and a notable valuation discount compared to Mastercard as key drivers for the upgrade.

The analysts commented, "A new CEO would have the opportunity to build on Mr. Schulman’s successes while potentially facilitating more aggressive M&A strategies, possibly leading the company into card present acquiring and expanding its total addressable market, ultimately enhancing revenue and EPS growth."

Notably, PayPal’s stock experienced a decline of over 60% last year.