This PayPal Analyst Expects 2024 To Be A 'Transition Year,' Foresees Stock Range-Bound Due To Valuation Concerns

Shares of PayPal Holdings Inc PYPL traded lower on Tuesday, as the company’s stock was downgraded from Buy to Neutral by Mizuho.

Mizuho analyst Dan Dolev also decreased his price target on PayPal stock from $72 to $65.

Meanwhile, BofA Global Research notes that investors are awaiting the California-based company’s fourth-quarter results, due on Feb. 1, along with initial 2024 guidance from PayPal’s new CEO and CFO.

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The PayPal Analyst: BofA analyst Jason Kupferberg maintained his rating on PayPal Holdings at Neutral, with a price objective of $66.

The PayPal Thesis: As PayPal approaches its Q4 results, BofA analyst expectations include a decline in year-over-year transaction profit growth, though at a slower rate than in Q3. The pace of re-acceleration in this metric in 2024 is considered crucial for the stock’s performance.

“PYPL still has a strong brand and balance sheet, but we see '24 as a transition year,” said Kupferberg.

Additionally, investors are keenly awaiting initial 2024 guidance from the new leadership. Despite slight improvements in intra-quarter US eCommerce data, PayPal is not expected to announce significant changes to its strategy. Key priorities include the faster rollout of next-gen consumer checkout and PayPal Complete Payments for the SMB market, as well as improving Braintree margins.

While certain areas may require increased investment, CEO Alex Chriss has hinted at potential efficiency improvements within the business.

Despite possessing a strong brand, balance sheet, and scale, PayPal’s shares are anticipated to be range-bound in the short term due to valuation concerns and prevailing weak sentiment.

Price Action: Shares of PayPal Holdings were down 4.18% to $58.45 on Tuesday.

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