PayPal's Results Were 'Ok, But High Visibility Strengthens Conviction'

Credit Suisse’s Paul Condra believes that the results reported by Paypal Holdings Inc PYPL were “just-OK.”

Condra maintains an Outperform rating on the company, while raising the price target from $43 to $47.

Surprising Growth

“The take rate continues to drop, but volume and transaction growth continue to surprise to the upside. Transaction expenses and loss provisions keep creeping up, but are offset by strong control on operating expenses,” the analyst mentioned.

Related Link: PayPal Keeps Its Bullish Investors Happy In Q3

Despite these “good enough” results, management increased the mid-term revenue guidance from 15 percent to 16–17 percent, while maintaining the margin guidance of flat to up.

Increased Conviction

Condra stated that drives greater conviction on PayPal’s ability to sustain mid to upper teens EPS growth through 2018, and potentially into 2019 as well.

“We see upside potential from share repurchases, better-than-expected margin expansion (we conservatively model flat margins in 2017 and 2018), and potential M&A,” the analyst added.

The EPS estimate for 2017 has been lowered from $1.81 to $1.78.

At last check, PayPal was up 7.75 percent on Friday at $43.20.

Full ratings data available on Benzinga Pro.