PayPal's Technical and Fundamental Analysis Suggests a Hold with Potential for Upside, 1 month ago

Paypal Technical Analysis

PayPal Holdings, Inc. (NASDAQ: PYPL) closed at $58.45 on January 4, 2024, signaling a slight decline of 0.31% from the previous trading session. The stock price fluctuated between $57.44 and $59.065 throughout the day, with an annual high of $88.625 and a low of $50.25. PayPal's market capitalization sits at approximately $63.02 billion with about 1.08 billion shares outstanding.

The technical indicators present a mixed outlook for PYPL. The Relative Strength Index (RSI) of 34 suggests that the stock is neither oversold nor overbought, although it's edging closer towards the oversold territory. The 50-day moving average of $57.5016 is just below the last close, indicating a potential support level. However, the stock remains notably below its 200-day moving average of $63.99595, highlighting a medium-term downward trend.

The Moving Average Convergence Divergence (MACD), sitting at 1.792493, may also suggest a potential upcoming positive trend reversal due to its positive value. The Average True Range (ATR) is $2.878, reflecting moderate volatility for intraday price movement. Support and resistance are currently pegged at $55.06 and $59.53, respectively.

Fundamental Analysis

Fundamentally, PayPal shows some resilience, with an earnings per share (EPS) of $3.35 and a Price to Earnings (PE) ratio of 17.45, which is reasonable for the industry but not as competitive as it could be. The company's next earnings announcement is due on February 7, 2024, which may inject volatility into the stock as investors anticipate the financial results.

Regarding the analysts' ratings, PYPL maintains a "Buy" consensus, with 22 analysts recommending a buy, 9 holding, and none suggesting a sell. The absence of "sell" or "strong sell" ratings reflects a generally positive outlook from market professionals. The analyst target consensus for PYPL is at $127.69, with a high estimate at $290 and a low at $72. The target median price of $120 shows that analysts see potential growth from the current price level.

Paypal However, the Discounted Cash Flow (DCF) valuation of $127.217 suggests that the stock might be undervalued, which could point to an investment opportunity for value-seeking investors.

Recent News Sentiment and Predictions

Recent news mentioned that Jim Cramer considered PayPal as one of the worst Nasdaq performers of 2023, which could cast a negative sentiment over the stock. Nevertheless, other reports indicate that the worries about PayPal might be overexaggerated, suggesting a potential upside as market concerns dissipate over time.

Given the combination of fundamental and technical analysis, along with recent news sentiment, predictions for the next trading day and the upcoming week might expect a cautious uptick in price if broader market conditions are favorable. PayPal is hovering near a support level which could hold if the overall market conditions do not deteriorate.

Overall Evaluation

The evaluation of PayPal Holdings, Inc. seems to lean towards a "Hold" position with a potential shift to "Buy" if the stock demonstrates a positive momentum supported by both technical indicators and fundamental improvements. Investors should watch for the stock to maintain or increase from its 50-day moving average and RSI to climb away from oversold conditions. Additionally, the upcoming quarterly results could be a catalyst for a change in the stock's trajectory.

The "Hold" recommendation is based on the current market sentiment, technical ambiguity, and the need for more signals of a definite uptrend. However, given the fundamentals, analysts' optimism, and DCF valuation, investors with a long-term perspective might find PayPal an attractive option, hence keeping the door open for a transition to "Buy" should the aforementioned positive indicators emerge and market sentiment improves.

Check full Paypal forecast and analysis here.