On Thursday, PayPal (NASDAQ:PYPL) stock rose 2.6% and closed at $168.05 after an analyst upgrade. At the last closing price, PayPal’s market cap was $197.3 billion. The company’s stock price has risen 9.8% in the trailing five-day period, while it has risen 44.9% in the trailing 12-month period. The stock is trading 0.5% below its 52-week high of $168.83 on Thursday. PayPal stock was also trading 104.8% above its 52-week low of $82.07 on March 23, 2020. On a year-to-date basis, the stock has risen by 55.4% as of Thursday.
Why did PayPal stock rise?
On Thursday, Citi analyst Ashwin Shirvaikar increased the target price on PayPal stock to $186 from $145 and maintained a “buy” rating. According to a report from TheFly, “The analyst continues to view PayPal as a member of the disruptor category, benefitting from an accelerated shift to digital commerce that supports its growth and long-term profile. Shirvaikar still sees sufficient valuation upside at current levels and remains a buyer of the stock.”
Susquehanna analyst James Friedman also increased the target price on PayPal stock to $190 from $150 and maintained a “positive” rating. According to a report from TheFly, “The analyst said the company is quietly rolling out in-store payments with QR functionality and while it is still in the early days on the merchant acceptance side, their massive consumer relevance could prove instrumental.”
Among the 42 analysts following PayPal stock, 15 recommend a “strong buy,” 20 recommend a “buy,” and seven recommend a “hold.” None of the analysts recommend a “sell.” Wall Street analysts have a 12-month target price of $160.94 for PayPal stock. Overall, the target price implies a downside potential of 4.2% compared to the stock’s closing price on Thursday. The consensus target price for the stock has risen from $150.51 in May—a growth of 6.9%.
Growth projections for PayPal
In the first quarter, PayPal reported a non-GAAP EPS of $0.66, which was in-line with the first quarter of 2019. The earnings missed analysts’ consensus estimate of $0.75 per share. PayPal generated sales of $4.62 billion—a growth of 11.9% from the first quarter of 2019. The company missed analysts’ consensus sales estimate of $4.74 billion. The online payments giant exited the first quarter of 2020 with 325 million active customers. In the first quarter, PayPal processed $190.6 billion in payment volume compared to $161.5 billion in the same period last year. Wall Street analysts expected $195.2 billion in payment volume for the first quarter.
Wall Street analysts expect PayPal to post sales of $4.9 billion in the second quarter. The figure would mark a rise of 14.5% YoY (year-over-year) compared to $4.3 billion in the second quarter of 2019. Also, analysts expect the company to report a non-GAAP EPS of $0.86 in the second quarter. Currently, analysts expect 13.4% and 17.1% growth in the company’s 2020 and 2021 revenues, respectively. Meanwhile, they expect a non-GAAP EPS of $3.33 and $4.11 in 2020 and 2021, respectively.
On Thursday, PayPal stock was trading 8.2% above its 20-day moving average of $155.35. The stock is also trading 22.4% above its 50-day moving average of $137.32 and 37.1% above its 100-day moving average of $122.55. PayPal’s 14-day relative strength index score is 73, which suggests that it’s overbought.
PayPal stock has a middle Bollinger Band level of $155.35, while its lower Bollinger Band level is $144.57. On Thursday, the stock closed near its upper Bollinger Band level of $166.14, which suggests that it’s overbought.
PayPal stock rose 1.8% in the pre-market trading session today at 5:35 AM ET. At the same time, Visa (NYSE:V) and Mastercard (NYSE:MA) stocks rose 0.8% and 0.7%, respectively. Visa and Mastercard’s target prices suggest potential returns of 7.3% and 5.4%, respectively.
To learn more, read PayPal Posts Lower Q1 Results, Future Looks Hopeful and Buying PayPal Stock? 2 Things You Need to Know.