PayPal (PYPL, Financial) reported first-quarter results that exceeded market forecasts, with gross profit growth excluding interest significantly outpacing expectations. Additionally, the company's adjusted earnings surpassed guidance by an impressive 15%. This performance highlights PayPal's strategy of competitively pricing its services while encouraging customers to adopt multiple products.
In maintaining its fiscal 2025 guidance, PayPal's management is preparing for potential economic challenges, anticipating a possible slowdown in consumer spending during the latter part of the year. The company noted a promising start to April, though partially attributed this to spending accelerated by tariff-related concerns. Despite these positive signals, experts at BTIG suggest that more efforts are required to fully instill confidence in projected growth by fiscal year 2027.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 38 analysts, the average target price for PayPal Holdings Inc (PYPL, Financial) is $84.68 with a high estimate of $125.00 and a low estimate of $49.00. The average target implies an upside of 28.31% from the current price of $66.00. More detailed estimate data can be found on the PayPal Holdings Inc (PYPL) Forecast page.
Based on the consensus recommendation from 47 brokerage firms, PayPal Holdings Inc's (PYPL, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for PayPal Holdings Inc (PYPL, Financial) in one year is $95.34, suggesting a upside of 44.45% from the current price of $66. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the PayPal Holdings Inc (PYPL) Summary page.
PYPL Key Business Developments
Release Date: February 04, 2025
- Total Payment Volume (TPV): Grew 10% to nearly $1.7 trillion for the full year.
- Revenue: Increased 7% to $32 billion for the full year.
- Non-GAAP Earnings Per Share (EPS): Increased 21% year over year to $4.65 for the full year.
- Free Cash Flow: Generated $6.8 billion for the full year.
- Share Buybacks: Completed $6 billion in share repurchases for the full year.
- Transaction Margin Dollar Growth: Increased 5% excluding the benefit of interest on customer balances.
- Venmo Monetization: Over 20% growth in Venmo debit card and Pay with Venmo monthly active accounts.
- Active Accounts: Total active accounts increased by nearly 9 million to 434 million.
- Transaction Revenue: Grew 4% to $7.6 billion in the fourth quarter.
- Operating Margin: Non-GAAP operating margin declined 34 basis points to 18% in the fourth quarter.
- Cash and Investments: Ended the quarter with $15.4 billion in cash, cash equivalents, and investments.
- Debt: $11.1 billion in debt at the end of the quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PayPal Holdings Inc (PYPL, Financial) delivered strong financial results in 2024, with a 10% growth in total payment volume reaching nearly $1.7 trillion.
- The company achieved a 21% year-over-year increase in non-GAAP earnings per share and generated $6.8 billion in free cash flow.
- Venmo monetization showed significant progress with over 20% growth in Venmo debit card and Pay with Venmo monthly active accounts.
- PayPal Holdings Inc (PYPL) successfully rolled out new branded checkout experiences and expanded its PayPal Complete Payments platform.
- The company formed significant partnerships with major brands like NBCUniversal, Roku, and StockX to drive Fastlane adoption.
Negative Points
- PayPal Holdings Inc (PYPL) faces a 5-point revenue growth headwind in 2025 due to renegotiations with large Braintree merchants.
- The company expects a $150 million headwind from interest rate cuts in 2025, impacting transaction margin dollars.
- There is a planned normalization in transaction loss during 2025, which could affect financial performance.
- The company anticipates some volatility in unbranded volume growth due to ongoing renegotiations and market dynamics.
- PayPal Holdings Inc (PYPL) is experiencing some softness in international markets, particularly in Europe, which may impact growth.
