It looks like Thursday will be another bad day for you PayPal (NASDAQ:PYPL), as the leading digital payments company faces a nearly 11% decline in its shares. Despite beating expectations on both revenue and profits in its Q4 2023 report, PayPal saw a decline in active accounts. Furthermore, the company's guidance fell short of expectations, contributing to investor disappointment.
In the quarter, revenue rose 8.1% year over year to $8 billion, beating Street forecasts by $130 million. At the opposite end of the scale, adjective. EPS of $1.48 beat analysts' expectations by $0.12. There were other strong metrics. Total payment volume (TPV) saw a 15% increase (13% FXN) to $409.8 billion, while payment transactions per active account rose 14% to 58.7.
But on the negative side, total active accounts fell from 435 million at the end of 2022 to 426 million. Looking ahead, for 2024, the company expects adjusted EPS to be around $5.10, roughly the same as last year, and down from Wall Street's forecast of $5.53. For the first quarter, PayPal expects moderate EPS growth. This should take the number to around $1.23, which is below the consensus of $1.26.
This is a transitional period at PayPal as new CEO Alex Chriss aims to re-accelerate the company's growth. Investors may be showing disappointment with the way things are going so far, but Goldman Sachs analyst Michael Ng believes the company is making the right noises and believes the cautious outlook may turn out to be a good thing in the end.
“In our view, the quarter was relatively balanced with 2024E estimates being conservative enough and PYPL set up to beat year-over-year numbers thanks to better discipline for operating expenses and new product contributions (which is not reflected in the guidance,” the analyst said). ). We are also encouraged by PYPL's new disclosures around TPV growth (e.g., PSP, branded checkout, and Venmo), the incorporation of SBC as an expense into adjusted results beginning Q1 2024, and the commitment to return another $5.0 billion to shareholders through reinvestments. Purchase in 2024E. “.
Summing up, Ng reiterated his buy rating on PayPal shares, saying: “We believe PayPal's consumer brand confidence and PayPal's continued investment in value-added features should support PYPL's current market share position, with operational efficiencies (relative to historical levels) Which should position PYPL for a strong performance when e-commerce growth strengthens back to historical DD% growth rates.
This Buy rating comes with a price target of $74 (down from $80), which suggests shares will rise 32% over the next year. (To view Ng's track record, click here)
Among Ng's colleagues, PYPL bulls and conservatives are roughly equal. Based on 12 Buys and 13 Reviews, the stock has a Moderate Buy consensus rating. According to the average price target of $69.23, a year from now, shares will trade for a premium of approximately 24%. (be seen PayPal stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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