5 PayPal Analysts Praise 'Solid' Q1 Earnings: 'Nice To See Dollar Growth Turn Positive' (UPDATED)

Editor’s Note: The description of PayPal’s stock movement has been updated for accuracy and tone.

Shares of PayPal Holdings Inc PYPL were trading lower on Wednesday after the company reported its first-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Goldman Sachs analyst Michael Ng maintained a Buy rating, while raising the price target from $74 to $76.
• Stifel analyst Charles Nabhan reaffirmed an Equal-Weight rating, while lifting the price target from $70 to $75.
• Mizuho Securities analyst Dan Dolev reiterated a Neutral rating, while raising the price target from $60 to $68.
• JMP Securities analyst Andrew Boone maintained a Market Outperform rating, while lifting the price target from $70 to $82.
• JPMorgan analyst Tien-tsin Huang reaffirmed an Overweight rating, while raising the price target from $70 to $77.

Check out other analyst stock ratings.

Goldman Sachs: PayPal delivered higher-than-expected results for Q1 due to "transaction margin growth and opex discipline," Ng said in a note.

The company's transaction margin dollars rose by 4% year-on-year to $3.5 billion, surpassing consensus with a better-than-expected TPV (total payment volume) growth of 14% year-on-year. This included "accelerating growth at branded (+7% yoy v. +5% in 4Q23) and strong -albeit slowing- growth at PSP (+26% yoy v. +29% in 4Q23),” Ng added.

Stifel: PayPal made a "solid start" to a transition year, delivering better-than-expected results and "effectively raised its FY EPS guidance," Nabhan said.

"With the company’s various initiatives still in early stages of monetization, we continue to view ’24 as a transitionary year and believe it is premature to expect a near-term turn in sentiment," the analyst wrote. "That said, we view 1Q as a step in the right direction and expect a reduced drag from underperforming pieces of the portfolio (i.e. Xoom) to benefit results," he added.

Mizuho Securities: "After negative growth in 2023, it was nice to see transaction margin dollar growth turn positive at +4% in 1Q," Dolev wrote in a note.

That "transaction revenue less transaction expense" indicates more modest growth of 1% despite easy comps and "a ~200bps acceleration in high-margin Branded and ~300bps deceleration in lower-margin Braintree,” Dolev added.

JMP Securities: "We come away from the quarter with greater confidence that PayPal’s new management team is enacting real change with the business and with multiple catalysts ahead," Boone said in a note. The company also reiterated its cost discipline, which suggests that the earnings guidance could prove conservative "as new products improve PayPal's competitive position in the market," he added.

While payments remain "highly competitive" with the proliferation of accelerated checkout options, "PayPal's scale and existing customer base remain significant assets," the analyst further stated.

JPMorgan: PayPal made a "good start to the year," with transaction margin dollar growth being "largely driven by improving losses," Huang said.

"Importantly, however, underlying volume and engagement trends continue to be healthy, with Branded volume growth accelerating to +7% and revenues being a positive contributor to total company growth, while overall transactions per account were +7% y/y (ex-PSP)," the analyst wrote. "New product rollouts seem to be progressing on track," and Fastlane could hit the market by the back half of the year, he added.

PYPL Price Action: Shares of PayPal Holdings had declined by 2.6% to $66.14 at the time of publication on Wednesday.

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