PayPal gets a rare upgrade to ‘outperform’

PayPal Holdings Inc (NASDAQ: PYPL) has already bounced 45% off its low in mid-July but a Daiwa analyst says the stock is not out of juice yet.

PayPal stock still has another 15% upside

On Tuesday, Kazuya Nishimura upgraded the PayPal stock to “outperform” and raised his price target to $116 that represents another 15% upside from here.

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The analyst turned bullish on the digital payments company shortly after it substantiated its commitment to lowering costs and announced a $15 billion share repurchase programme. In a note to clients, he said:

While visibility for the operating environment remains murky, the significant deterioration of the firm’s earnings prospects since last year seems to have played out. We see increased upside to the shares leading up to Investor Day.

PayPal will host the Investor Day in early 2023. Earlier in August, the Nasdaq-listed firm named Blake Jorgensen its new Finance Chief, which, as per the UBS analyst, could be another impetus for the PayPal stock.

Elliott Management now has a sizable stake in PayPal

Most importantly, Nishimura wrote, a $2.0 billion stake that Elliott Management (activist investor) recently confirmed in “PYPL” is big positive for the digital payments company.

Agreeing to the bullish note on Tuesday, Odyssey Capital Advisors’ Jason Snipe said on CNBC’s “Halftime Report”:

Elliott is a really nice play; the Street likes it. They got a really good reputation in this space. So, I like PayPal here. It’s been beaten up, there’s an opportunity. The multiple has come down dramatically as well, trading at 26 times forward.

In its latest reported quarter, PayPal had adjusted per-share earnings and revenue that topped Street expectations. The stock is still down nearly 50% for the year.