BoFA upgrades PayPal to ‘buy’ on turnaround progress, catalysts ahead

Investing.com -- Bank of America on Monday upgraded PayPal Holdings Inc (NASDAQ:PYPL ) to “buy” from “neutral,” on progress in payment giant’s turnaround under the new management. BofA cited improved execution, a potential acceleration in transaction growth by 2025, and encouraging holiday e-commerce spending trends.

The note points to PayPal’s branded Total (EPA:TTEF ) Payment Volume (TPV) growth, which has stabilized at 6%, with even a slight improvement in the metric could bolster investor sentiment.

“Investor Day could also be a positive catalyst, and we expect ample free cash flow generation & share buyback to persist”

With a new branded checkout button rollout in 2025 designed to enhance consumer experience, management is prioritizing innovation in a competitive market.

BoFA has noted PayPal’s conservative financial guidance, with ample free cash flow, and ongoing share buybacks as factors that could attract underweight long-only investors.

Risks to the upside includes, slowing Braintree volumes and possible tax headwinds from global regulatory changes.

However, BoFA views these risks as manageable at current valuations.

BofA also raised its price objective to $103 from $86, reflecting a roughly 15% upside potential from current levels. It remains confidence in PayPal’s ability to navigate challenges and sustain its turnaround momentum.

Source: Investing.com