PayPal (NASDAQ: PYPL) stock has outperformed over the past year of trading, now up 117%. The recent introduction of cryptocurrency and buy now pay later (BNPL), has positioned PayPal at the forefront of the payment revolution. Not to mention, the rise in online business is sending PayPal merchant fee revenue through the roof. The company also released record breaking Q1 earnings results with a 29% growth in net revenue YOY. However, the reward is never without the associated risk. This article will breakdown PayPal’s stock forecast for 2021 and beyond.
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PayPal stock forecast from analysts
Analysts and price forecasts
Analysts coverage on Paypal stock, to a large extent is bullish. Amongst 41 Wallstreet analysts, the average rating is a Buy (35 Buy Ratings). The average 12 month price target is currently sitting at $279.97, a 4% upside from the current trading price. However, if we look at the price targets released in April and March the average price target is bolstered to $347.50 a share. This translates an upside of 25% from the current trading price. Here are the more recent targets from Wallstreet analysts:
Rosenblatt Securities 4/26/2021 – analyst Sean Horgan boosted Paypal’s 12 month price target from $320 to $350 a share. The analysts maintains the Buy rating on the stock noting Paypal and Square as the top payment stocks. The target is the equal second highest, suggesting a 27% upside from the current trading price.
BTIG Research 3/30/2021 – analyst Mark Palmer reiterated a price target of $345 a share and a Buy rating on PYPL stock. The target implies an upside of 23% from the current trading price. Palmer noted the recent growth the company has experienced will not only be sustained, but likely accelerated in the future.
CitiGroup 2/12/2021 – analysts at CitiGroup boosted the 12 month price target to $350 a share. The company was trading at $271 at the time of the coverage release, an implied upside of 29% from the Feb trading price (now reflects 27% upside).
Growth catalyst for Paypal stock in 2021
PayPal’s future catalysts will likely revolve around new currencies and business models joining the economy. The decision to allow users to buy, hold, and sell cryptocurrency will not fade as a catalyst. The initial adoption of cryptocurrency includes Bitcoin, Etherium, Bitcoin Cash, and Litecoin. The insurgence of new cryptocurrencies will see PayPal’s digital wallet offering expand. Thus, this announcement lays the groundwork for future cryptocurrency-PayPal growth opportunities in the future. Moreover, PayPal’s recent decision to join the buy now pay later movement with “Pay-in-4” will see more retail, and e-commerce stores partner with PayPal.
Paypal boasts strong revenue growth
At large PayPal is showing financial strength in the areas of earnings growth, widening profit margins, and growing revenues. The explosion of e-commerce during the pandemic saw PayPal’s merchant fees grow exponentially. Analysts see the rush to e-commerce as an ever-growing trend. Not to mention the recent news around PayPal accepting cryptocurrency should add to the positive revenue outlook. Paypal estimated revenue to grow by 20% in 2021 according to Q1 earnings. In addition to this, Paypal recorded its best performing Q1 ever with revenue reaching $6.03 Billion (31% YOY growth). In addition, the company beat analysts expectations by roughly 20% with an EPS of $1.22 per share.
Looking ahead, analysts expect Paypal to generate $31.02 Billion in revenue. The forecast illustrates a YOY growth of 20.60%. This is an impressive factor of Paypal’s business, as the revenue continues to grow at a rapid pace whilst the business matures.
“Our strong first quarter results demonstrate sustained momentum in our business as the world shifts into the digital economy. Our addressable market continues to grow as we launch new products and services for our 392 million active accounts.”Dan Schulman, President and CEO on Q1 Earnings results
What are the risks involved with Paypal stock?
Firstly, as Paypal places more emphasise on Cryptocurrency within its core business, investors should expect a greater firm- specific volatility. The shift in crypto-cycles can play a huge role in the success of a business that deals directly and even indirectly with cryptocurrency. Therefore, over time we may begin to see more correlation between crypto-trends and the PYPL stock performance.
Summary of the PayPal stock forecast
Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.
Overall, PayPal’s positioning for 2021 is bullish according to analysts. The introduction of PayPal buy now pay later, and cryptocurrency should create more catalysts in the future and encourage strong revenue growth. However, the bears argue a concern surrounding the instability of cryptocurrency and its effects on the business.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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