PayPal's Q4 Earnings, FY 2017 Guidance 'Strangely Boring'

Paypal Holdings Inc PYPL reported broadly in-line Q4 2016 results and raised its 2017 revenue guidance. The company’s earnings release had “no drama or major announcements,” Bernstein’s Lisa D. Ellis said in a report. She maintains a Market-Perform rating on the company, with a price target of $44.

Following the results, PayPal's shares trended down 1–2 percent. Ellis commented that the investor community would be “difficult to impress” after the company had set “a relatively high bar for themselves with their three year guidance.”

Results And Outlook

PayPal recorded non-GAAP EPS of $0.42, representing 17 percent growth. Revenue came in at $2.98 billion and non-GAAP operating margins at 20.8 percent. The take rate trajectory was down 5 percent in 4Q, better than the trend of down 7 percent.

The company guided to 2017 revenue growth of 17–19 percent, versus its projection of 16–17 percent last quarter. PayPal gave “shareholder-friendly commentary on shifting the Credit business to asset-light” and its long-term capital return plans.

Ellis pointed out, however, that the company’s 2017 non-GAAP EPS outlook of +13–16 percent was likely below investor expectations of 16–17 percent. PayPal’s guidance also implies GAAP margin contraction and total payment volume deceleration for the third straight quarter.

“Our bull scenario for 2017 looks a bit less likely (slower earnings growth), and our bear scenario a bit more likely (pressure on margins),” the analyst commented.

In Friday's pre-market session, shares of PayPal were down 1.9 percent at $40.71.