Wells Fargo Sees Tricky Q2 For PayPal Amid Subdued Broader E-Commerce Growth, Inflation; Cuts Price Target By 16%

  • Wells Fargo analyst Jeff Cantwell cut the price target on PayPal Holdings, Inc PYPL to $97 from $115 and reiterated an Overweight rating ahead of quarterly results. 
  • Acknowledging that it's "tough to paint a particularly rosy" near-term fundamental picture when broader e-commerce growth looks subdued, Cantwell noted that his Q2 data is rather unpromising, and inflation looks "higher for longer." 
  • Cantwell believed PayPal managed to hold onto its 2022 guide and that OVAS revenue can be a source of upside in Q2 and beyond.
  • PayPal's increasingly solid financial performance should become more evident beginning in 2H22 after the lapping of eBay, and this should be an excellent 'catalyst' for the shares, he added.
  • In the long term, he believed that PayPal could grow EPS by 20%+ on an annual basis as it continued to execute against its sizable opportunities in online and offline commerce, generating strong TPV growth by continuing to focus on driving greater engagement.
  • Price Action: PYPL shares traded higher by 2.75% at $79.86 on the last check Wednesday.
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