RBC Capital: Here’s What To Expect For PayPal Earnings Today

PayPal (PYPL) is scheduled to announce Q1 earnings results today after market close. Going into the print the Street is looking for EPS of $0.75 (-3.8% Y/Y) and revenue of $4.72B (+14.3% Y/Y).

However, RBC Capital analyst Daniel Perlin believes these estimates may prove too optimistic. “Based on our prior work and what we learned intra-quarter, we believe there is downside risk to both our and the Street’s revenue and EPS estimates given the evolving impacts from COVID-19” he writes.

The analyst has a buy rating on the stock with a $120 price target- indicating that shares could pullback by just over 4%. He is expecting revenue of $4,758M, EPS of $0.76, and EBITDA of $1,262M. That’s alongside TPV (total payment volume) of $192,418M- significantly below the Street’s expected $196,369M.

“We are forecasting TPV of ~$192B (19% y/y growth), a slight deceleration from the year- ago quarter, as we expect impacts from COVID-19 began showing up in its business in mid-late March” the analyst explains.

While datapoints suggest e-commerce sales have held up the most, Perlin nonetheless sees a downward bias in the data as efforts to maintain social distancing put downward pressure on consumption and peer-to-peer payments.

Looking forward, Perlin believes the largest effects will materialize next quarter (Q2/20).

What’s more, the stock has already rallied 16% year-to-date, significantly outperforming the S&P 500 which is down 11% over the same period. Given this recent rally as well as Covid-19-related risks, Perlin concludes “we believe the setup into the print skews negative.”

Overall, PYPL scores a bullish Strong Buy Street consensus, with 15 recent buy ratings vs just 3 hold ratings. Meanwhile the $129 average analyst price target indicates upside potential of just over 2.5%. (See PayPal stock analysis on TipRanks).

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