Three reasons why this struggling fintech stock might come out of the doldrums
PayPal is down 16% this week, but a senior analyst is setting a long-term bullish case for the struggling stock.
The company’s poor performance is followed by leadership uncertainty. PayPal’s chief financial officer, John Rainey, announced last week that he would be leaving the company in late May. However, Bruderman Asset Management’s Akshata Bilkiri made an optimistic case for PayPal on CNBC’s “Fast Money” this week.
A company’s stock analyst loves the stock for three reasons:
1. Post-pandemic sales could rebound
Bailkeri, whose company owns PayPal stock, believes sales will rise in the post-pandemic world.
“We think the percentage of online retail sales should go up in 2023,” Belkyrie said. “PayPal is the primary beneficiary of it.”
2. Useful spin-offs from eBay
It claims that PayPal as a stand-alone company also bodes well for the stock. Although its stock is now down, PayPal shares hit an all-time high last July.
“eBay is no longer a real burden,” Belkyrie said. “The company has achieved significant growth even after it exited the company in 2015.”
3. Attractive evaluation over five years
PayPal is trading at a significant growth-adjusted discount against its competitors, according to Bailkeri. She sees stock volatility as a buying opportunity to make gains over the next five years.
“You look at long-term trends and movements online from monetary growth to non-monetary growth,” she said. “This is more reflective of the five-year outlook than may happen in the next two quarters.”
Where is PayPal headed
Overall, Bailkeri expects double-digit returns for PayPal over the next five years due to strong secular trends.
“People will continue to shop more online and have more payments that exist in the digital space,” she said.
PayPal, which reports earnings on Wednesday, is down 26% so far this month.
Not giving an opinion