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PayPal's Technical and Fundamental Analysis Points to Potential Upside

StockInvest.us, 3 months ago

Paypal Technical Analysis

PayPal Holdings, Inc. (PYPL) closed the last trading session at $59.65, witnessing a positive change of $2.04 or 3.54% from its previous close. The trading volume of 17.92 million surpassed its average volume by over 3 million shares, indicating increased investor interest. The stock operates between a support at $58.47 and a resistance level of $60.98. A break beyond the resistance may signal a bullish trend, while failing to hold support could see a retest of lower levels.

The Relative Strength Index (RSI) stands at 66, signaling that PYPL is approaching the overbought threshold but still has some room before it is considered excessively valued on a technical basis. The 50-day moving average of $55.99 is below the current price, highlighting a short-term bullish trend. However, the 200-day moving average of $65.53 suggests a bearish sentiment in the longer term. The Moving Average Convergence Divergence (MACD) shows a value of 1.57, indicating that upward momentum is currently in play.

The stock's Average True Range (ATR) is approximately $2.73, suggesting a moderate level of volatility with a potential for larger price swings. Given the stop-loss is calculated to be at $57.14, investors might be guarded against a potential downside while looking for price action to determine their next moves.

Fundamental Analysis

PayPal sits with a market capitalization of around $64.31 billion and a P/E ratio of 17.81, implying that the company is reasonably valued compared to earnings. The Earnings Per Share (EPS) at $3.35 points to solid profitability, which is a positive indication of the company's financial health. However, the stock's performance reflects a notable drop from its yearly high of $88.63, presenting a potential value proposition if the company's fundamentals are strong.

The recent news about the company hints at some investor optimism, following reports highlighting its potential as a buy, the possible overestimation of risks by the market, and its place in an investor's portfolio for long-term wealth creation. Additionally, the consensus among analysts leans towards "Buy" with no "strong sell" opinions, providing a positive outlook for PYPL shares.

Looking ahead, the next earnings announcement is scheduled for 02/07/2024, which suggests that the stock could experience increased volatility around this date as investors anticipate performance results and management's outlook.

Paypal The discounted cash flow (DCF) is estimated at $124.02, which is significantly higher than the current trading price, implying that the stock might be undervalued based on its future cash flow projections.

Short-term Outlook

Based on the technical and fundamental analysis, PYPL is expected to show continued interest in the next trading day and the upcoming week. If the stock breaks through the resistance level at $60.98, it could potentially trigger a more decisive bullish trend. However, investors will have to watch for volume indicators and RSI to gauge whether the momentum can be sustained.

The presence of a higher DCF compared to the trading price, coupled with a favorable consensus among analysts, injects a positive sentiment into the short-term forecast.

Overall Evaluation

Taking into account the mentioned technical indicators, current sentiment, and fundamental aspects, the stock of PayPal Holdings, Inc. could be categorized as a 'Buy'. The stock shows signs of recovery and potential undervaluation when considering the DCF. The positive momentum reflected in the recent upward price action, and analysts' consensus add to the reasoning behind this evaluation.

While risks inherent to the tech sector and market-wide movements should not be overlooked, PayPal's established position in the online payments industry, combined with recent analysis suggesting that the market may have overblown its risks, favor the upside potential.

Investors should continue to monitor the company's forthcoming earnings announcement, macroeconomic factors, and any potential changes in the tech industry's regulatory landscape that could influence PayPal's performance.

Check full Paypal forecast and analysis here.