Gearing Up For Earnings: PayPal Holdings, Inc. (PYPL) and Yelp Inc. (YELP)

Both PayPal Holdings Inc. (NASDAQ:PYPL) and Yelp Inc. (NYSE:YELP) will be reporting earnings next week. Read below what analysts have to say about these two stocks.

PayPal Holdings Inc.

PayPal will be reporting its earnings for Q315 on October 28 after market close. This will be the company’s first earnings announcement as a stand-alone company, following its spinoff from eBay. Mark Palmer from BTIG weighed in with a Buy rating and a $48 price target. Palmer expects the company to post adjusted EPS of $0.28 versus consensus estimate of $0.29.

One of the things Palmer will be watching for is whether PayPal reiterates its guidance for FY15. He thinks such a reiteration is highly possible because recently PayPal CEO Dan Schulman stated that management stands “firmly behind” the guidance for FY15. The company’s FY15 guidance is for 15-18% growth in revenues (foreign-exchange neutral), an addition of 3 to 5 million net new active users every quarter, and quarterly growth in key metrics like transactions per user and revenue per user.

During the earnings announcement, Palmer will also be looking for additional information on two key recent events: PayPal’s announcement of Macy’s as a new client and “its non-loss of Uber as a client of its Braintree unit.” On September 15, the company announced Macy’s enabling PayPal in stores, online and in-app. Also, recently PayPal’s shares had struggled because of rumors of Uber ending its agreement the payment provider. However, these reports proved to be false when an Uber spokesperson said, “This is totally false,” while adding “Our partnership with PayPal remains strong.”

Out of 19 analysts polled by TipRanks who have recently rated PayPal’s stock, 11 have rated it as Buy, 5 have rated it as Hold, and 3 have rated it as Sell. The average consensus price target for the stock is $40.56, an upside of nearly 20% over current levels.

Yelp, Inc.

Yelp will be reporting its Q315 earnings on October 28 after market close. Ahead of the announcement, Tom Forte of Brean Capital weighed in on the stock, reiterating a Buy rating on the stock with a $40 price target. The analyst hopes Yelp will be reporting a clean quarter as compared to three consecutive quarters of lackluster performance; after all three previous results, shares declined 20%.

Expecting solid results, Forte says he anticipates sales of $139.7 million. While this marks an increase of 36.3%, it will be lower than consensus estimate of $141.4 million. In terms of EBITDA, Forte expects a good performance at $15.9 million; more than consensus estimates of $14.5 million. GAAP EPS loss, according to Forte, is expected at a loss of $0.07 against consensus estimate of a loss of $0.09.

Forte is also awaiting an update from Yelp on its efforts to allow consumers use Yelp not only as a research portal but also as a destination for conducting business, such as ordering food without leaving Yelp. In this respect, the analyst will be waiting to hear about the performance of Eat 24, the company acquired by Yelp in February 2015 to advance its platform.

Based on TipRanks’ statistics, out of 25 analysts who have recently rated Yelp’s stock, 8 have rated it as a Buy, 15 have rated it as Hold, and 2 have given a Sell rating to the stock. The average consensus price target for the stock is $31.84, an upside of over 42% above current levels.


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