Bob Peck Previews PayPal's Q3 Results: 'Investors Likely To Focus On Impact Of V/MA Deals'

Paypal Holdings Inc PYPL is likely to report its Q3 results in-line with expectations, and investors could focus on the potential impact of the recent agreements with Visa Inc V and Mastercard Inc MA, SunTrust Robinson Humphrey’s Robert "Bob" S. Peck said in a report. He maintains a Buy rating on the company, with a price target of $45.

PayPal is scheduled to report its Q3 results on October 20. Analyst Peck expects the company to post:

• 192 million active customer accounts, up 11 percent year-over-year.
• Total transactions of 1.5 billion, up 23 percent year-over-year.
• TPV of $88.0 billion, up ~26 percent year-over-year.
• Revenue of $2.64 billion, up 17 percent year-over-year.
• Non-GAAP EPS of $0.34.

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Agreements: A Key Focus Area For Investors

Among the key issues that investors are likely to focus on is the potential impact of the deals with Visa and MasterCard, Peck noted. He believes there is “potential for higher volumes” with the Visa deal, although the immediate impact could be an increase in funding costs, offset partially by modest volume-based incentives.

“We think the direction of the impact from the MasterCard deal may be similar, but the magnitude may be smaller,” the analyst commented.

Other issues that investors may focus on include credit-quality metrics, the Brexit impact and intensifying competition for Venmo.

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