PayPal (NASDAQ: PYPL) reported strong first-quarter results, and Evercore ISI analyst David Togut said that despite worsening supply chain issues, he believes that the PayPal shares have reached their bottom.
Evercore has PayPal as a Top Pick for 2022
PayPal reported strong first-quarter results this Wednesday; total revenue has increased by 7.8% Y/Y to $6.5 billion, slightly above expectations, while the earnings per share were $0.88 (in-line with expectations).
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The total payment volume grew 13% to $323 billion in the first three months of the 2022 fiscal year compared with the same period of 2021, and the company added 2.4 million new active accounts.
Transaction revenue reached $6 billion compared with $5.62 billion in the first quarter of 2021; the number of payment transactions was 5.16 billion vs. 5.34 billion in Q4 and 4.37B in the year-ago quarter.
PayPal continues to benefit from the increased adoption of digital payments but also faces increased headwinds from high inflation, negatively pressuring discretionary spending, combined with challenges tied to the impact of the war between Russia and Ukraine.
PayPal suspended its transactional services in Russia, while at the same time enabled users to send money to residents in Ukraine, as well as those now refugees across Europe amid Russia’s invasion of the country.
CEO Dan Schulman said that the company is seeing the impact of global supply chain shortages because consumer confidence has weakened, and for full-year 2022, PayPal expects adjusted EPS of $3.81-$3.93, down from its prior range of $4.60-$4.75.
Evercore ISI analyst David Togut said that despite worsening supply chain issues, he believes that the PayPal shares have reached their bottom. Evercore has PayPal as a Top Pick for 2022, while Oppenheimer analyst Dominick Gabriele also assigned an Outperform rating on PayPal. Dominick Gabriele added:
Though cautious, worst likely behind us, the significant upside potential for the brave, if management executes/meets expectations.
Goldman Sachs analyst Michael Ng said that payment volume should continue to benefit from the continued digitization of payments and e-commerce growth as well as international expansion, and he assigned a buy rating on Paypal.
Fundamentally looking, PayPal trades at less than twenty times TTM EBITDA, and with a market capitalization of $101.94 billion, shares of this company are not expensive.
PayPal’s balance sheet remains stable, the company recently expanded its strategic partnerships with American Express and Citibank, and shares of this company could provide strong returns for long-term investors.
$80 represents current support
PayPal’s stock price has fallen more than 50% after reaching the highest level in 2022 of $196.10 on January 04, and the current share price could be a good entry price for long-term investors.
If the price falls even more in the upcoming period, every price in a range from $80 to $70 could be a very good opportunity to invest in PayPal stock.
Summary
PayPal reported strong first-quarter results this Wednesday but continues to face increased headwinds from high inflation, negatively pressuring discretionary spending, combined with challenges tied to the impact of the war between Russia and Ukraine.
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