PayPal Analyst Applauds Cost Cuts, But Slashes Stock Price Forecast Anyway

Mizuho analyst Dan Dolev maintains PayPal Holdings Inc PYPL with a Buy and lowers the price target from $100 to $92.

• The price target reflects the discount to Visa Inc V & Mastercard Inc MA, given slowing e-commerce trends and potential signs of softness in branded checkout trends.
• Assessing outgoing web traffic from key PYPL partners like Etsy Inc ETSY and Nike, Inc NKE indicates a further step-down in its traffic share.
• Dolev values PayPal relative to the U.S. legacy payments group.
• Dolev believes the conservative 2023 guide, which assumes discretionary spending remains 'under pressure,' should help PYPL meet its +18% EPS growth target. 
• The macro, which remains resilient, likely outperformed management's 'worst case' expectations YTD. 
• Dolev's analysis shows that PYPL has the cost levers to navigate potential e-comm checkout softness and meet or exceed EPS guidance. 
• PYPL's upcoming new CEO announcement is yet another potential catalyst. However, PYPL should favor a visionary CEO instead of an operator to make it a positive one.

Price Action: PYPL shares traded lower by 2.32% at $74.64 at the time of publication Wednesday.

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