PayPal Analyst Sees Narrowed Product Focus, Opex Optimization Driving Upside

RBC Capital analyst Daniel Perlin reiterated an Outperform on PayPal Holdings, Inc PYPL and a $118 price target.
PayPal’s narrowed product focus on its high-conviction growth areas, he believed, will result in an acceleration in transaction volumes and revenue in FY23 through Venmo’s expanded monetization rate and Braintree’s revenue growth execution.
As Braintree grows to ~37% of total PYPL TPV by FY23, he sensed that management would offset the potential further drag on operating margin by increasing the business through smaller and international merchants while also increasing the volume of its PayPal and Venmo transactions.
In Perlin’s opinion, the expected revenue growth from the high-conviction growth areas, coupled with the effect of the company’s operating expense optimizations, will enable PayPal to drive margin expansion of ~190bps Y/Y in FY23, leading to EPS expansion of 23% Y/Y.
Price Action: PYPL shares traded lower by 0.07% at $84.42 on the last check Thursday.

Momentum48.87

Growth53.86

Quality16.52

Value56.94

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