PayPal's Q2 Print Reinforces William Blair's Case For The Payments Stock

While PayPal Holdings Inc PYPL did not report a blowout second quarter Wednesday, the data shows a steady consistency in the payments company's results, according to William Blair. .

The Analyst

William Blair analyst Robert Napoli maintained an Outperform rating on PayPal. 

The Thesis

PayPal reported after the close Wednesday with earnings per share that were 28 percent higher and driven in part by better-than-expected revenue, Napoli said in a note. (See the analyst's track record here.) 

PayPal also repurchased over $2 billion in shares in early 2018 and accredited a new $10-billion buyback program, the analyst said. 

Many of PayPal’s metrics appeared steady over the last two quarters, Napoli said: the March quarter showed 22-percent revenue growth and the addition of 8.1 million accounts. PayPal posted 22-percent revenue growth and the addition of 7.7 million accounts.

The number of transactions made per PayPal account rose 9 percent year-over-year, according to William Blair. 

PayPal's checkout with smart buttons "dynamically presents online consumers with the most relevant payment method at checkout, making it easy for consumers to pay the way they want to pay," Napoli said. "It is simple for merchants to integrate."

The feature is being rolled out in several countries, he said. 

Venmo, the PayPal-owned mobile payment service, announced a surge in users in the quarter, the analyst said. Volume rose 78 percent for a total of $14.2 billion and nearly 23 million users, he said. 

Price Action

PayPal shares were down 4 percent at $87.72 at the time of publication Thursday. 

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Photo courtesy of PayPal.