PayPal's Q4: An Analyst's Likes And Dislikes

Paypal Holdings Inc PYPL reported in-line Q4 results and announced 2017 guidance at the high-end of the consensus expectations. While the earnings released did not have a significant impact of PayPal’s stock, ongoing negotiations with Amazon.com, Inc. AMZN “could be a catalyst,” Credit Suisse’s Paul Condra said in a report.

Analyst Condra maintains an Outperform rating on PayPal, with a price target of $47. News released after the company’s earnings print indicating ongoing talks with Amazon.

Without providing any details, the report mentioned that the companies wanted to find “mutual benefit” across the platforms. Condra commented that there were “several areas of possible cooperation between the two companies including payments, data sharing and lending.”

Positives In The Quarter

The analyst enumerated the things he liked in the quarter as:

• Strong volume growth.
• Increasing customer accounts.
• Increasing transactions and volume per account.
• Abating take-rate decline.
• Operating leverage.
• Commentary on Venmo monetization expected in 2018.
• Overall bullish tone on growth opportunities and leverage.

Negatives In The Quarter

Condra mentioned the following things he didn’t like in the quarter:

• Higher transaction expense.
• Higher credit/transaction loss expense, which translates to lower gross margin.
• Ramp-up in stock comp expense in 2017.
• EPS guidance in line with Consensus.

At last check, shares of PayPal were down 3.08 percent at $40.22.