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Don't Worry About PayPal Just Yet: JPMorgan

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PYPL - Don't Worry About PayPal Just Yet: JPMorgan

JPMorgan’s Tien-tsin Huang mentioned that for 1Q, Paypal Holdings Inc PYPL “reported its fastest constant currency volume and revenue growth in over a year, but profit flow through was limited by acquired Xoom dilution.”

Huang reiterated an Overweight rating on the company, with a price target of $41.

1Q & Guidance

PayPal reported its EPS for 1Q marginally above the estimates and the consensus, as well as penny higher than the high end of the guidance, driven by non-operating items.

Although the company reiterated its guidance, Huang believes some might be disappointed by the lack of a guidance raise, although “it is too early in the year to expect raised expectations from a new management team.”

The analyst believes it is time to focus on the company’s accelerating growth, robust buybacks and positive KPI and partner comments, which could together lead to upside potential to the guidance if the trends persist.

One Touch

The company’s One Touch international expansion jumped from 23 to 143 markets, with 21 million account holders.

Huang pointed out that a recent ComScore study revealed that the conversion rate for One Touch was 87 percent, which was 26 points higher than its closest competitor.

In addition, the Venmo pilot is now available to 550,000 users, and should be available to the entire Venmo user base by the end of the year.

Apr 2016UBSMaintainsNeutral
Apr 2016CitigroupMaintainsBuy
Apr 2016Compass PointInitiates Coverage onNeutral

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