PayPal plunges after analysts' downgrade

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