Sign InSummary
PayPal Holdings, Inc. presents a value buying opportunity for investors despite recent bearish trends, with a consensus Buy rating among analysts and a projected target price of $128.21; however, the technical indicators suggest a bearish trend in the short and mid-term, making it advisable to hold and observe the stock's performance post-earnings announcement on November 1, 2023. (August 30, 2023)
Fundamental Analysis
PayPal Holdings, Inc. (ticker: PYPL) remains a well-recognized name in the financial technology space specializing in digital and mobile payments. With its market capitalization of approximately $70.76 billion, the firm presents a value buying opportunity for investors on a contrarian stance. The firm has been on a path to cost-cutting and share repurchases, thereby bolstering its economic health, as reiterated in recent news. Despite the exit of a big investor, Elliot Investment Management, PayPal's fundamental strengths remain viable.
PayPal's earnings per share (EPS) stands at $3.54 with a price to earnings (PE) ratio of 17.92. Frequently, a lower PE ratio can indicate that the stock is undervalued, which may warrant further investigation. Considering the firm's earnings announcement is slated for November 1, 2023, investors are likely to keep a tab on its financial results.
The consensus among analysts who follow PayPal is a "Buy," with 22 recommending a buy, nine advising a hold, and none suggesting a sell or strong sell. The consensus target price for the stock is projected at $128.21, with the target high and low estimates of $290 and $72 respectively.
Technical Analysis
The closing price of PayPal's stock on August 30, 2023, was $63.42, a positive change of $0.92 or 1.47%. The price was relatively close to the day's high of $63.47, indicating a strong upward movement. However, it falls below both the 50-day and 200-day moving averages of $67.03 and $72.03, respectively, suggesting a bearish trend in the short and mid-term.
The last close is also beyond the year's low price of $57.29, yet it is far below the year-high price of $99.3. This further suggests that PayPal's stock has been bearish in the past year. But the relative strength index (RSI14) at 52 doesn't indicate an oversold or overbought condition.
The moving average convergence divergence (MACD), a momentum oscillator, has been negative for the past three months. This suggests a bearish signal for the stock. However, it's worth noting that the discounted cash flow (DCF) at $70.13 is considerably higher than the recent close price, indicating potential upward price movements.
Summary and Prediction
The narrative surrounding PayPal is promising with news of the company being mentioned as an oversold growth stock to buy and as a possible play for value investors. Considering both technical and fundamental aspects, the outlook for PayPal's stock seems to lean towards the positive despite the recent bearish trend.
For the next trading day on August 31, 2023, there might be a possible price rally if the bulls step in, which could drive the price towards the immediate resistance of $64.18.
Looking at the upcoming week, there may not be a drastic change in price due to the absence of significant market events. One would pay close attention to the company's earnings announcement on November 1, 2023, which could prove to be a significant price-moving event.
Final Evaluation
Considering the analysis, PayPal Holdings, Inc. can be categorized as a 'Hold'. While the overall sentiment seems positive, the technical indicators continue to reflect bearish trends. Further, considering the upcoming earnings announcement, it would be prudent to hold and observe as significant stock price movement can occur post-announcement based on the results.
