Trading Strategies For PayPal Stock Heading Into Q2 Earnings

Zinger Key Points
  • Analysts expect the company to report EPS of $1.05 on revenues of $6.59 billion.
  • The stock has been hovering near the 200-day SMA and the reaction to the print will determine if PayPal can regain the level.

PayPal Holdings, Inc PYPL gapped down slightly to start Wednesday's trading session and was falling an additional 2.5% intraday. The company is set to print its second-quarter financial results after the markets close

Analysts expect the company to report EPS of $1.05 on revenues of $6.59 billion for the quarter ending June 30. 

On July 25, BTIG analyst Lance Jessurun maintained a Buy rating on PayPal and raised a price target from $85 to $90. The new price target suggests 23% upside for the stock. Credit Suisse analyst Timothy Chiodo reiterated a Neutral rating on the stock and maintained a price target of $80. The price targets suggest about 10% upside for PayPal. Read More Here… 

When PayPal printed its first-quarter earnings report on May 8, the stock dropped almost 13% the following day before continuing in its downtrend, which brought PayPal to a May 26 low of $58.95. 

For that quarter, PayPal reported earnings per share of $1.17, beating a Street estimate of $1.10 per share. The company posted a top-line beat, reporting revenues of $7.04 billion, compared to the $6.98-billion consensus estimate. 

From a technical perspective, PayPal looks mixed heading into the event, trading close to the 200-day simple moving average (SMA). Of course, holding a position in a stock over earnings can be akin to gambling, as stocks can rise following an earnings miss and fall after reporting a beat. 

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial. 

The PayPal Chart: PayPal attempted to regain the 200-day SMA on Wednesday but rejected the area and fell slightly lower. The stock was working to print a doji candlestick, however, which could indicate the local bottom has occurred and PayPal will trade higher on Thursday. 

  • If PayPal receives a bullish reaction to its earnings print and regains the 200-day SMA on Thursday, Wednesday's low-of-day will serve as a higher low, which will confirm the uptrend remains intact. The most recent confirmed higher low was formed on July 27 at $71.81 and the most recent higher high was printed at the $76.54 mark on Monday. 
  • If PayPal tumbles following the event, the uptrend is likely to be negated with the formation of a lower low and a downtrend could be on the horizon. If PayPal continues to reject the 200-day SMA, a longer-term bearish cycle could be in the cards. 
  • PayPal has resistance above at $77.36 and at $82.07 and support below at $73.27 and at $68.71.

Read More: Key Observations Ahead Of PayPal’s Second-Quarter Results: Preview

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Long IdeasShort IdeasTechnicalsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!