PayPal: Q3 Turnaround & Apple Win, But E-Commerce Slowing
(Preview) Company Update (PYPL US) (Buy)
Summary
PayPal shares are down 4.2% Friday lunchtime, after Q3 results overnight, taking them to the lowest since 2017 and 18x 2022 EPS.
PayPal's Q3 results showed another quarter of mid-teens underlying volume and revenue growth, but e-commerce is slowing as we enter Q4.
Cost savings are progressing well, and PayPal management expects EBIT margin to expand and EPS growth to exceed 15% in 2023.
There was also a key strategic win in the form of a new agreement that will allow PayPal consumers and merchants access Apple Pay.
With shares at $73.32, we expect an exit price of $202 and a total return of 171% (37.8% annualized) by 2025 year-end. Buy.
Introduction
PayPal Holdings, Inc. is down another 4.2% Friday lunchtime (as of 2 pm EST, November 4) after Q3 2022 results overnight. PYPL stock has now fallen 69% since its July 2021 peak, to a level last seen in 2017:
PayPal Share Price (Last 5 Years)
Compared to when we upgraded our rating on PYPL to Buy in May 20…