PayPal Stock: Strong Fundamentals, Undervalued Status, Favorable Analyst Ratings Support Buy RecommendationStockInvest.us, 2 months ago
PayPal Holdings, Inc. (Ticker: PYPL) is a leading global provider of online payment solutions, traded on the NASDAQ Stock Exchange.
As of September 14, 2023, PayPal's closing price stood at $64.44, registering a 2.55% increase or a gain of $1.60 from its previous close. The trading volume for the day was 14.05 million shares, which was lower than the average trading volume of 16.41 million shares. The company has a market capitalization of $70.76 billion with 1.10 billion shares outstanding.
Price and Volume Analysis
In terms of price range, PayPal's stock reached a high of $64.6 and a low of $63.31 on the trading day. This is still significantly lower than the 52-week high of $98.98 and marginally above the 52-week low of $57.29.
Technical indicators portray a mixed picture. While the Relative Strength Index (RSI) of 67 signals the stock is nearing overbought territory, the negative Moving Average Convergence Divergence (MACD) of -0.19 suggests a bearish trend. Additionally, the stock trades below both its 50-day and 200-day moving averages—$66.23 and $71.00, respectively—indicating a recent downtrend.
The Average True Range (ATR) at 2.46, indicating that the stock has reasonable intraday volatility. Further, the stock seems to have solid support at the $64.18 level, with resistance at $66.43.
PayPal's PE ratio stands at 17.56, with an EPS of $3.67, indicating the company's sound earnings and profitability. Although the market price is less than the Discounted Cash Flow (DCF) valuation of $71.15, suggesting the stock might be undervalued.
The consensus rating among analysts is "Buy," with 22 analysts recommending "Buy" and 9 recommending "Hold," presenting a positive outlook for the company. Furthermore, the consensus target price of $120 suggests significant upside potential.
Relevant News Analysis
PayPal is facing increasing competition in the fintech space, particularly in the payroll services sector, where major players such as JPMorgan Chase are introducing new services. However, PayPal is not resting on its laurels. The company has extended its relationship with Uber and is continuing its global expansion, indicating strategic initiatives to stay competitive.
Despite slower growth in recent quarters and a leveling off of its user base, there is a positive outlook for PayPal's future. As per news on September 14, 2023, David Katz from Matrix Asset Advisors emphasized PayPal's solid fundamentals and reasonable multiples, backing a bull case for the stock with a 12-month horizon.
Stock Forecast and Final Evaluation
The recent closing price is below both the 50-day and 200-day moving averages, suggesting a bearish short term outlook. However, the analyst consensus of a "Buy" rating and the stock price being below the DCF provides a value investing opportunity.
PayPal faces competition in its space, but its recent Uber deal and its solid fundamentals are positives. Going forward, the next trading day and upcoming week might continue to see some consolidation before any significant movement upwards towards the consensus target price of $120.
Based on both technical and fundamental analysis, while considering growth potential and market trends, the final recommendation for PayPal stock is BUY. The strong fundamentals, potential growth in the long term, the stock's current undervalued status, and the overall favorable analyst ratings contribute to this decision.