Jefferies analysts are weighing in today on electronic payments giant Paypal Holdings Inc (NASDAQ:PYPL) and social media giant Facebook Inc (NASDAQ:FB), after the companies impressed the Street last night with their fourth-quarter earnings.
Paypal Holdings Inc
Paypal shares are up nearly 8% after the company reported quarterly earnings and revenue that beat analysts’ expectations. Paypal’s earnings results included revenues of $2,556M, compared to consensus estimates of $2,512M, driven by robust TPV growth.
Reacting was Jefferies analyst Jason Kupferberg, which reiterated a Buy rating on Paypal stock, with a price target of $44, which represents a potential upside of 30% from where the stock is currently trading.
Kupferberg wrote, “We are not surprised to see shares trading up after PYPL beat 4Q revs/EPS. Initial 2016 guidance is roughly in line with JEFe, and management expressed increased conviction in the medium-term outlook. We believe investors are also encouraged by acceleration in active users and payment volume growth, as well as improved customer engagement, and a $2B share repurchase plan. We continue to view PYPL as a scarce asset.”
The analyst continued, “PYPL is a scarce investment opportunity due to: 1) large-cap company growing its top-line at a mid-teens plus clip, 2) gradual margin improvement, 3) operating as a pure-play in the high-growth online segment of payments, while taking share, and 4) strong global brand and attractive cash flow/balance sheet profile.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jason Kupferberg has a yearly average return of 12% and a 63% success rate. Kupferberg has a -9.9% average return when recommending PYPL, and is ranked #213 out of 3596 analysts.
Facebook shares have taken off, adding 13.5% to trade at $107.24, after the company topped Wall Street’s estimates for both revenue and earnings in the fourth quarter. In reaction, Jefferies analyst Brian Pitz reiterated a Buy rating on Facebook shares, while raising the price target to $145 (from $135).
Pitz commented, “This 2015 holiday season could be remembered as a watershed moment when advertisers truly embraced mobile ads on a global basis. FB has built a remarkable ad platform that enables marketers of all stripes to serve targeted ads to nearly every consumer on the planet (1.4B+ mobile users). FB saw nothing that indicated macro weakness, and we think results bode well for other online ad names like Alphabet (GOOG).”
“We are increasing our revenue estimates on the beat, we model expenses growing ~35% Y/Y in ’16, and we are lowering our go-forward tax rate. As with last year, expense guidance looks conservative,” the analyst added.
According to TipRanks.com, analyst Brian Pitz has a yearly average return of 12.2% and a 61% success rate. Pitz has a 41.2% average return when recommending FB, and is ranked #128 out of 3596 analysts.
Out of the 35 analysts polled by TipRanks, 24 rate Paypal Holdings Inc stock a Buy, 8 rate the stock a Hold and 3 recommend Sell. With a return potential of 23.1%, the stock’s consensus target price stands at $41.53.