On Friday, brokerage Baird revised its price target on fintech payments giant PayPal (NASDAQ:PYPL) by 15% from $205 to $175. But PYPL stock charted a dismissive gain of 0.88% on the day despite the news.
The price cut on PayPal shares made headlines to close the trading week, but ultimately did not leave a negative impression on investors. After all, lead Baird analyst Colin Sebastian still thinks there’s more than 50% upside to PYPL stock. Sebastian left the firm’s outperform rating on PYPL stock while offering a bullish, medium-to-longer-term outlook of accelerating growth for PayPal’s merchant integration of digital wallets.
Baird also sees PYPL as a “secular winner” in the payments space despite a slightly cautious near-term stance given macro headwinds, slower growth and competition. The call largely jibes with Goldman Sachs’ midweek buy initiation and $144 price target which cited beneficial long-term market forces from the digitization of payments, e-commerce growth and international expansion.
PYPL stock’s more clear cut buy from Baird is also garnering favor from 2022’s well-discounted fundamentals and technicals. Following this past year’s broader tech selloff and more recent inflation-driven and geopolitical risks weighing on shares, PayPal shares are trading near five-year lows in relation to the stock’s sales and earnings. And with free cash flow estimated to grow by 11% to $6 billion this year, PayPal can continue to invest in its business and generate strong returns.
Lastly, Baird’s forecasted $175 price target has PYPL stock’s monthly price chart supporting a nearby bullish market cycle for the shares. With March completed, PayPal has formed an extremely oversold bullish hammer reversal candlestick. Attractively stationed outside the lower Bollinger Band, the pattern has also found beneficial support from PYPL’s 76% lifetime retracement level, as well as a bullish stochastics crossover in oversold territory.
All of this helps make PayPal stock a more certain, clear-cut buy.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
