Digital payments platform PayPal Holdings, Inc. (PYPL) in San Jose, Calif., recently announced a new partnership with Amazon.com, Inc. (AMZN), which will allow Venmo users to use the service as a checkout option on Amazon’s platform. The company also announced a…
$2.7 billion deal to buy Paidy, a ‘buy now, pay later’ solutions provider in Japan.
However, Bernstein has downgraded the stock from ‘Outperform’ to ‘Market Perform’ and lowered the price target from $260 to $220.
The stock has lost 28.7% in price over the past month and 32.5% over the past three months to close Friday’s trading session at $193.61. In addition, it is currently trading 37.6% below its 52-week high of $310.16, which it hit on July 26, 2021. Furthermore, intensifying competition in the digital payment market poses a severe risk to the company’s market position. So, PYPL’s near-term prospects look uncertain.
Here is what could influence PYPL’s performance in the upcoming months:
For its fiscal third quarter, ended September 30, 2021, PYPL’s net revenue surged 13% year-over-year to $6.18 billion. The company’s non-GAAP free cash flow for the quarter increased 20% year-over-year to $1.29 billion. In comparison, its non-GAAP net income came in at $1.32 billion, representing a 3% year-over-year increase. Its non-GAAP EPS was $1.11, up 4% year-over-year.
Several law firms are investigating potential claims against PYPL and some of its officers on behalf of shareholders who purchased or otherwise acquired PayPal securities between February 9, 2017, and July 28, 2021, on concerns of a potential violation of federal securities laws. It is alleged that the company had deficient disclosure controls and procedures.
In terms of forward P/S, PYPL’s 8.97x is 110.8% higher than the 4.26 x industry average Likewise, its 8.83x forward EV/S is 104.5% higher than the 4.32x industry average. Also, the stock’s forward EV/EBITDA and EV/EBIT of 30.32x and 35.04x, respectively, are higher than the 16.95x and 20.74x industry averages.
POWR Ratings Don’t Indicate Enough Upside
PYPL has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PYPL has a D grade for Value, which is in sync with its higher-than-industry valuation ratios. In addition…
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