PayPal Holdings Inc. (PYPL) has seen positive growth, outperforming the S&P 500 with ease. The stock has risen by approximately 72.1% this year compared to the S&P 500’s gain of 1.2%. The strong stock performance has placed it on the WhaleWisdom Heatmap, landing with a ranking of 16, up from 46. PayPal will next report results on Monday, November 2, 2020.
PayPal operates a global online payment system that serves as an electronic alternative to traditional paper methods. It acts as a digital wallet for many, convenient for small businesses to invoice, and offers financial products.
Looking at second-quarter activity by the top hedge funds and institutions, it seems that PayPal has some fans. Of hedge funds, 80 created new positions, 132 added to existing holding, 23 closed out, and 175 reduced their stakes. Overall, hedge funds increased aggregate holdings by about 6.2% to approximately 225.8 million from 212.6 million. Similarly, institutions were also buying, increasing their aggregate holdings by about 0.6% to approximately 978.8 million from 972.7 million.
Third quarter expectations and multi-year estimates are very favorable for PayPal. Analysts anticipate that earnings increased to $0.94 in the third quarter, representing approximately 54.6% year-over-year growth. Meanwhile, revenue is estimated to have increased to about $5.4 billion, a growth rate of 23.6%.
For the year, analysts expect to see about 20.6% growth in earnings, with estimates of $3.74 and rising to $5.54 by 2022. Additionally, revenue is forecast to grow by approximately 20.4% in 2020, 19.4% in 2021, and 18.2% in 2022, leading to revenue of roughly $30.2 billion in 2022.
Analysts Are Bullish
Analysts are positive on PayPal, with Susquehanna International Group, LLP’s analyst, James Friedman, raised PayPal’s price target to $235 from $220, keeping a Positive rating on the stock. Friedman cited the economy’s increase in debit transactions, which costs PayPal less than credit card transactions. Barclays Investment Bank’s Ramsey El-Assal also sees growth ahead for PayPal and raised the firm’s price target to $235 from $228, keeping an Overweight rating on the shares.
PayPal appears to be thriving, despite a pandemic that has hit so many other businesses hard. The company has a reputation as one of the safest and most convenient methods for performing monetary transactions online. Top analysts offer encouraging price targets and multi-year predictions for the stock. With its financial track record and continued potential for growth, investors have an opportunity, which is why hedge funds have been so bullish.