PayPal (PYPL.US) shares are trading 2.5% lower on Monday after Raymond James downgraded the payments company to market perform from outperform, ditched a $107 per share price target and took cautious stance on PayPal’s fourth-quarter earnings which will be released on Thursday after market close.
Analysts acknowledged that the company has a solid start of the year however 2023 revenue forecast is likely to imply flat to negative growth "which will likely result in the share loss narrative growing even louder."
“While most investors expect initial 2023 revenue growth guidance to come in below the Street (buyside 5-7% vs Street +9%, RJe +7%), we believe the 2023 top line outlook will imply flat to negative growth for branded checkout (vs e-com MSD+) which will likely result in the share loss narrative growing even louder,” Davis wrote in a note to clients
Analysts are confident that PayPal management will be able to lower costs more than prior EPS guidance of 15%+ in 2023, "the margin trajectory in 2024 and beyond is less clear as cost cuts will be in the rearview mirror and Braintree/unbranded will likely drive the majority of growth," Davis added.
PayPal (PYPL.US) stock rose over 33.0% from December lows, however upward move was halted around key resistance at $89.15, which is marked with upper limit of the broad 1:1 structure and 61.8% Fibonacci retracement of the last downward wave and as long as price sits below, main sentiment remain bearish. Stock launched today’s session lower, returning below long-term downward trendline. If current sentiment prevails, next support to watch lies around $80.45 and is marked with previous price reactions and 38.25 retracement. Source: xStation5