Paypal Holdings Inc (NASDAQ:PYPL): Buy on the Pullback


Shares in Paypal Holdings Inc (NASDAQ:PYPL) shot up 10.13% and closed at $44.15 on Friday after the company declared solid results for the third quarter and analysts upgraded the stock.

The stock traded 37.51 million shares, over four times its normal average volume of 8.12 million shares.

Paypal Holdings Inc (NASDAQ:PYPL) Q3 numbers are impressive

For Q3 the company reported EPS of $0.35, which was in line with analyst expectations, and revenue of $2.67 billion, which beat by $20 million, and was up an impressive 18.1% year-on-year.

“We are pleased to have delivered another quarter of strong results. The opportunities for PayPal to grow and gain share have never been greater,” said Dan Schulman, President and CEO.

“We are further expanding the ubiquity and value of the PayPal brand and moving deliberately towards achieving our vision of becoming an everyday, essential financial service for people around the world,” he added.

Paypal Holdings Inc (NASDAQ:PYPL) TPV shows excellent growth

The company claimed that it grabbed significant market share during the third quarter. It processed $87 billion in Total Payments Volume (TPV), which was up 25%.

At the end of the quarter the company had 192 million active customer accounts, up 11%.

It processed 1.5 billion transactions, up 24%. That represents 30 payment transactions per active account on a trailing 12 month basis.

Major agreements were entered with Visa and MasterCard, while the company was successful in becoming a payment option on Ali Baba’s global retail marketplace, AliExpress.

“The ecommerce market today is roughly 10 percent of a $25 trillion global retail market,” CFO John Rainey said on CNBC’s “Squawk Alley.”

“And we see that growing at double digit rates and yet PayPal continues to grow in excess of that… we’ve shown in the face of competition for each quarter, successively, we’ve been able to grow in the 25 to 30 percent range and that’s by focusing on what we do best, which is digital payments,” he added.

Paypal Holdings Inc (NASDAQ:PYPL): More conviction on long-term profitability

Analysts at Stifel upgraded PayPal to buy from hold and the price target to $49 from $43, saying that this earnings report put to rest debates about margin pressure. “We believe PayPal is on the path to becoming the central hub for online consumer financial activity,” they said.

Analysts at Oppenheimer and Wedbush retained their Outperform ratings but boosted their price targets from $43-$45, and from $50-$54, respectively.

For fiscal year 2017, PayPal expects revenue growth in the range of 16% to 17% on an Fx-neutral basis.

Technically, the stock has surged past its bogey of the $41 level on high volume and is now trading well above its 200-day moving average of approximately $38. If there is a pullback, and it declines by $2.00-$3.00, investors can consider buying into the stock.


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