Bernstein and Argus Boost PayPal Optimism with Stock Rating Upgrades

PayPal is gaining traction as analysts on Wall Street adopt a more optimistic outlook. Recent upgrades from Bernstein and Argus highlight the company’s successful turnaround efforts and its promising growth potential.

The positive revisions stem from PayPal’s notable improvement in transaction gross profit. Analysts noted the encouraging performance attributed to positive growth in branded transactions, pricing initiatives from Braintree, and the monetization of Venmo.

Bernstein also pointed out the enhanced product momentum and overall execution under the company’s new leadership.

According to Argus, PayPal is accepted by more than 75% of the top 100 retailers in the U.S., with expectations of further penetration in the upcoming year.

This upgrade follows a strong second-quarter earnings report in which PayPal exceeded expectations, posting adjusted earnings per share of $1.19. Moreover, the management’s upgraded full-year earnings guidance indicates a bullish outlook.

The growth is driven by several factors, including the strategic initiatives from the new management team, such as enhancements to Fastlane and Braintree, which have boosted product momentum. Additionally, PayPal’s forward price-to-earnings ratio of 14x appears attractive, especially considering the company’s strong free cash flow generation.

The diverse portfolio, particularly its strong presence in eCommerce and the potential to extend into advertising and commerce platforms, presents considerable growth opportunities. Despite ongoing macroeconomic challenges and competitive pressures, PayPal’s recent performance and strategic positioning enhance its appeal as an investment option.

Bernstein reiterates that the company’s recent performance and strategic direction make it a compelling investment. Argus also anticipates steady long-term growth in payment volumes for PayPal, driven by increased merchant adoption, the rise of mobile payments, and higher transaction values. The brokerage views the shares as offering good value at current levels, reflecting confidence in the company’s turnaround and strong competitive edge.