Raymond James Downgrades PayPal (PYPL) to Market Perform

(Updated - February 6, 2023 6:03 AM EST)

Raymond James analyst John Davis downgraded PayPal (NASDAQ: PYPL) from Outperform to Market Perform.

The analyst comments "We are downgrading PYPL to Market Perform from Outperform following the strong start to the year (+20% YTD vs S&P 500 +8%), coupled with our cautious stance on the 4Q22 print (2/9 ATC). Simply put, 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 (see math on page 2). Additionally, while we are confident in mgmt’s ability to cut costs and likely exceed the prior EPS guide of 15%+ in 2023, the margin trajectory in 2024 and beyond is less clear as cost cuts (+ OVAS bump) will be in the rearview mirror and Braintree/unbranded will likely drive the majority of growth. All in, despite the fact the stock is still relatively inexpensive (16x 2024E non-GAAP EPS, 14x FCF), we are moving to the sidelines as we believe meaningful multiple expansion will prove difficult if branded checkout is in fact losing material share."

For an analyst ratings summary and ratings history on PayPal click here. For more ratings news on PayPal click here.

Shares of PayPal closed at $85.52 yesterday.

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