PayPal Holdings (NASDAQ:PYPL)
After receiving a positive rating from a prominent analyst, the share price of financial technology pioneer PayPal Holdings (NASDAQ:PYPL) rose sharply in early trading on Wednesday. At 10:20 a.m. Eastern Time, the shares of PayPal had increased by 4%.
What’s the Story?
According to The Fly, the risk-reward profile of PayPal Holdings (NASDAQ:PYPL) stock is something that Bank of America analyst Jason Kupferberg finds appealing. Because of this, he is shifting his stance on the stock from neutral to buy it. In addition, Kupferberg increased his price target for PayPal shares from $94 per share to $114 per share, which indicates an upside potential of nearly 20% from where it is currently trading.
Operational efficiencies are one type of possible factor that could benefit PayPal Holdings (NASDAQ:PYPL) stock. But Kupferberg isn’t just speculating here; he has solid evidence to support his claims. Dan Schulman, the CEO of PayPal, stated on a conference call to report the company’s financial performance for the second quarter of 2022, “We are dramatically decreasing our cost structure.”
PYPL aims to turn its continued revenue growth into outsized profit growth by reducing its cost structure. The company’s stock will undoubtedly appeal more to investors if this goal is achieved.
What’s Next?
The price of PayPal Holdings (NASDAQ:PYPL) stock is down over 50% year to date and almost 69% from its all-time high in 2021. Shareholders will likely view this as a negative development; nevertheless, patient long-term investors may view it as an opportunity. Kupferberg also mentioned the possibility of share repurchases as a catalyst for PayPal stock. In point of fact, the corporation has recently given its approval for a repurchase program of $15 billion. The bright side of this situation is that management will have a more remarkable ability to repurchase shares if the stock price drops, resulting in the investment being stretched further.
However, in the end, despite the current reduction in its growth rate, PYPL will need to keep finding methods to grow. This will be necessary for PYPL to remain competitive. And it will have to fulfill its commitment to finding cost reductions without lowering the quality of the items it offers without being able to do so. In the absence of these factors, it is doubtful that share repurchases will be a sustainable long-term driver.
Featured Image- Megapixl @Andreistanescu
Author Shariq Khan 
