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Citi Previews PayPal's Q2 Earnings Report

Citi Previews PayPal's Q2 Earnings Report - PYPL, Visa Inc. NYSE:V

Citi’s Ashwin Shirvaikar expects Paypal Holdings Inc PYPL 0.69% to report strong results when the company announces its 2Q16 performance on July 21.

Shirvaikar maintains a Buy rating on the company, with a price target of $46.

Expectations For Earnings Call

The analyst expects PayPal to also discuss the Brexit impact and outlook, the relationship with Visa Inc V 0.08% and PayPal Credit when the company reports its 2Q results.

Shirvaikar mentioned that the 2Q16 results were expected to be robust, with continued customer account additions in the low double digits, FX neutral TPV growth in the upper 20 percent range, net revenue growth in the low teens and in-line EPS.

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“The Synchrony timing is well-known. In other words, we do not look for a major surprise stemming from the quarterly report,” the analyst stated.

Brexit And PayPal Credit

Shirvaikar also pointed out that the U.K. was PayPal’s second largest market, although it only represents 13 percent of net revenues and a mostly export oriented cross-border market.

“For 2–3 quarters, PayPal and Visa have been negotiating on Steering and Data sharing,” the analyst noted, while adding that with PayPal moving its earnings call to follow Visa’s call “increased the hope that a possible settlement or a deeper relationship was likely.”

Shirvaikar said PayPal Credit was a source of investor concern, and the company could ease these concerns through increased disclosure.

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DateFirmActionFromTo
Jul 2016Stephens & Co.Initiates Coverage onOverweight
Jul 2016BarclaysMaintainsOverweight
Jun 2016OppenheimerInitiates Coverage onOutperform

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