Fourth Quarter Earnings On Deck:
PayPal (PYPL:NSD) is scheduled to reveal its fourth-quarter results on February 9 following the market close. The company has encountered difficulties as the epidemic winds down and e-commerce growth slows, with high inflation affecting the purchasing power of clients. (https://www.riverbendresort.us/)
However, PayPal remains hopeful, anticipating an 8% increase in Q4 adjusted earnings per share due to cost reduction initiatives and increasing sales.
Paypal Stock-Q3 Results and Guidance:
In the third quarter of 2022, PayPal’s revenue increased 11% year-over-year to $6.85 billion, while its adjusted EPS decreased 2% to $1.08. Despite this, the company’s expectations for Q4 2022 sales growth were more muted, at 7%. The business expects its adjusted EPS for Q4 2022 to fall between $1.18 and $1.20, compared to $1.11 for the same period in the prior year.
Initiatives for Productivity and Cost Reduction:
As part of its cost-cutting measures, PayPal has stated that it will lay off around 2% of its personnel, or 7% of its total workforce. The organization is on track to realize cost reductions of at least $1.3 billion in 2023. This expense decrease, along with increased revenue, is anticipated to result in an 8% increase in Q4 adjusted EPS.
Paypal Stock-Analyst Ratings:
Analysts anticipate a 7% growth in revenue to $7.39 billion in the fourth quarter of 2022, with an almost 8% increase in adjusted EPS to $1.20. PayPal projects that net new active accounts (NNAs) will range between 3 million and 4 million for the fourth quarter of 2022.
Wall Street’s Forecast:
PayPal stock has a consensus rating of Strong Buy, with an average price target of $103.97 per share, meaning roughly 21% upside potential. In 2023, shares have already gained 12%.
Outlook for 2023:
According to its early estimate, PayPal anticipates a minimum 15% increase in its adjusted EPS in 2023. Investors are interested in the company’s productivity measures and its outlook for the future year.
