PayPal Holdings Inc. (PYPL) has experienced a significant sell-off, with shares down approximately 10% following its Q4 earnings report. BofA Global Research maintains a "Buy" rating, asserting that the market reaction is overdone. The report highlights that investor expectations for branded total payment volume (TPV) growth were overly optimistic, contributing to the stock's decline. Despite a modest 6% y/y growth in branded TPV, the U.S. segment showed a 3% acceleration, which was overshadowed by broader concerns.
Attention now turns to PayPal's upcoming Investor Day on February 25th in NYC, where the new management team is expected to outline a multi-year financial framework. Key topics will likely include the branded business's performance, international rollout plans, and potential growth drivers like Braintree and Venmo. BofA anticipates that credible guidance on transaction profit growth and operating margin expansion could positively impact shares.
Post-earnings, BofA has raised its 2025 and 2026 EPS estimates to $5.06 and $5.82, respectively, while maintaining a price objective of $103. The firm has adjusted its DCF assumptions, now using a 3% terminal growth rate and an 11% WACC. PayPal's current stock price is $78.13, up 0.53% from the previous close.