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Goldman Raises Target On PayPal To $49 Following Q3 Earnings

Paypal Holdings Inc PYPL 8.24% reported its Q3 results, with the revenue coming in at $2.67 billion, marginally ahead of the consensus forecast.

Goldman Sachs’ Heath P. Terry maintains a Buy rating on the company, while raising the price target from $47 to $49.

Q3 Results

FX-neutral revenue grew 21 percent year-on-year, as compared to 19.5 percent in Q2, driven by FX-neutral TPV growth of 28 percent.

The adjusted operating income, however, came in at $490 million, below the consensus expectations, while adjusted operating margins stood at 18.4 percent, as compared to 19.9 percent for Q3:15.

Terry mentioned that the decline was driven by “mix shift to Braintree and higher-than-expected credit provisions.”

Related Link: PayPal's Results Were "OK, But High Visibility Strengthens Conviction"

Investor Concerns

“While investor focus remains on competitive uncertainties, near-term margin pressures from mix shift, and needed investment, we believe TPV growth from the growing ubiquity of the service and incremental engagement from new product offerings like One Touch will drive continued outperformance,” the analyst went on to say.

Mobile TPV growth remained flat sequentially at 56 percent year-on-year, while the take rate was 3.05 percent, below the Q2 levels.

Adjusted operating margins declined 150 bps year-on-year, driven primarily by a decline in transaction margins.

Transaction and loss expenses increased 29 percent year-on-year.

At last check, Paypal was up 8.18 percent at $43.37.

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DateFirmActionFromTo
Oct 2016Stifel NicolausUpgradesHoldBuy
Oct 2016Evercore ISI GroupInitiates Coverage OnBuy
Oct 2016BarclaysMaintainsOverweight

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