PayPal (NASDAQ: PYPL) stock has outperformed over the past year of trading, now up 68.50%. 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 and E commerce is sending PayPal merchant fee revenue through the roof. In early May, Paypal released record breaking Q1 earnings results with a 29% growth in net revenue YOY. With many growth opportunities arising for Paypal stock, this article will breakdown Paypal’s stock forecast for 2021.
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What are analysts saying about Paypal stock?
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 $285.36, an 8% upside according to MarketBeat Data. However, the most recent targets in May are all above $300. This suggests a growing positive sentiment on Wallstreet for PYPL stock. Here are the more recent targets from Wallstreet analysts:
Morgan Stanely 5/6/2021 – Analyst James Faucette raised the companies price target to $337 a share with an overweight rating. Faucette noted to investors that “PayPal’s stronger-than-expected top-line performance highlights the value proposition that its solutions have for consumers and merchants” according to theStreet.
Wells Fargo 5/6/2021 – The firm also increased their target after the Q1 performance to $310 a share while maintaining their Overweight rating.
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 on Wallstreet.
BTIG Research 3/30/2021 – analyst Mark Palmer reiterated a price target of $345 a share and a Buy rating on PYPL stock. Palmer noted the recent growth the company has experienced will not only be sustained, but likely accelerated in the future.
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 which includes expansion globally. 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 as a result.
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 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. Paypal estimates revenue to grow by 20% in 2021 according to guidance in the Q1 earnings.
“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. We will continue to update our viewers on any Paypal changes in forecasts as we move through 2021.
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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