Stock Market News

PayPal Stock Down After Wolfe Downgrade to Peer Perform on High Recession Exposure

2022.07.20 17:30

PayPal Stock Down After Wolfe Downgrade to Peer Perform on High Recession Exposure
PayPal Stock Falls After Wolfe Downgrade to Peer Perform on High Recession Exposure

By Senad Karaahmetovic

Shares of PayPal (NASDAQ:PYPL) are down 1.5% in premarket Wednesday after a Wolfe Research analyst cut the rating to Peer Perform from Outperform.

The analyst sees PayPal highly exposed to a potential recession while he also expects to see shares range-bound in the near term.

“Pending further clarity on the company’s ability to showcase sustainable EPS growth in the high-teens or better, we view a fair value for the stock being in the $80-$90 range, predicated on ~18-20x our 2023 adj. EPS estimate (which incorporates a mild recession), or 24-27x our stock-comp expensed EPS estimate of $3.18,” he told clients in a note.

The analyst expects PYPL to report in-line results, which may be enough for shares to rally as the market is fearing the worst.

“We believe shares are likely to remain range-bound near-to-medium term given fears surrounding macro/recession sensitivity, fears over competitive pressures, uncertainty around management changes and longer-term growth rates,” he added.

Elsewhere, the analyst also downgraded Western Union (NYSE:WU) to Underperform from Peer Perform and Meridianlink (NYSE:MLNK) to Peer Perform from Outperform.

As far as the overall Payments, Processors, and IT Services sector coverage is concerned, the analyst believes “a downturn is already being priced in to a degree.” On the ongoing Q2 earnings season, he argues that the “forward-looking commentary will outweigh 2Q prints, perhaps more than normal given the macro backdrop.”

Source

Related Articles

Leave a Reply

Back to top button