(News Bulletin 247) – Credit Suisse maintains its ‘neutral’ rating on PayPal stock, with a price target lowered from 85 to 80 dollars.
The analyst cites a backdrop of gross margin pressure in Q1 which saw PayPal record transaction margins down around 375bps year-over-year.
‘Our model suggests that around 150 to 200 basis points were related to the increase in Braintree mix, while around 130 additional basis points were related to the normalization of loan losses’, indicates Credit Suisse, which thus suggests that the remaining 50 to 100 basis points are tied to a combination of headwinds for small businesses and unfavorable exchange rates.
Against this backdrop, Credit Suisse says it anticipates 2024 EPS at $5.59 (vs. $5.65 previously) due to minor additions to its transaction expense forecast.
‘The risks are macro (inflation, discretionary, rates), competitive (Apple Pay, Shop Pay, etc.), execution and tariffs’, the broker believes.
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