From Nasdaq: 2024-05-21 21:06:25

PayPal (PYPL) is underperforming the S&P 500, with a YTD gain of only 4.4%. It has faced losses and struggles to keep up with tech stocks’ rally in recent years, lowering its market cap significantly.

PayPal’s growth has stalled, with revenue and profit growth slowing. The company expects only mid-to-high single digit EPS growth in 2024, with an operating margin decline to 15.2% in Q1.

Wall Street analysts rate PYPL stock as a “Moderate Buy” with a mean target price of $73.84, 15% higher than current prices. The company is perceived as a value stock now, with potential for growth in the future.

Morgan Stanley suggests PayPal should consider initiating a dividend to attract more investors. Despite the trend in tech companies towards dividends, PayPal’s ample free cash flow and strong financial position make it a favorable candidate.

While there is potential for PayPal to start paying dividends in the future, share repurchases might be a more strategic move for now. With a focus on business transformation and current valuations, share buybacks could be more beneficial in the short term.



Read more at Nasdaq: PayPal Stock Is Underperforming: Would Starting a Dividend Help?