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UBS analyst Rayna Kumar told investors in a note Wednesday that PayPal (NASDAQ:PYPL) could grow revenue at the high end of mid-teens beyond 2022.
UBS analyzed the company’s mix and growth potential of its largest total payments volume components, including Core PayPal, Braintree, P2P, and eBay (NASDAQ:EBAY), following the removal of its medium-term guidance.
“We estimate Core PayPal and Braintree represent 52% and 17% of TPV, respectively, while, as disclosed by PayPal, P2P generates 28%, and eBay comprises the remaining 3%,” said Kumar. “After examining growth rate potential for each, from 2022E to 2026E, we estimate PayPal can achieve a 16.6% revenue CAGR, assuming 17.7% TPV growth and 18.2% OVAS revenue gains, partially offset by a ~2% headwind from take rate pressure.”
“With PayPal trading at just 14x our 2023E EPS (9% above consensus), the market does not appear to price-in such growth, providing a solid entry point for the shares, we believe.”
The analyst reiterated a Buy rating and a $143 price target.
