PayPal (NASDAQ:PYPL) (NEOE:PYPL:CA) is scheduled to announce Q3 earnings results on Tuesday, October 28th, before market open, and the stock is expected to remain rangebound on concerns surrounding momentum in the company’s branded checkout business.
The consensus EPS estimate is $1.20 (flat Y/Y) and the consensus revenue estimate is $8.23B (+5.5% Y/Y).
Over the last 2 years, PYPL has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.
Over the last 3 months, EPS estimates have seen 15 upward revisions and 14 downward revisions. Revenue estimates have seen 26 upward revisions and 2 downward revisions.
Last quarter, the stock dropped ~8% after PayPal reported its financial results despite an earnings and revenue beat, as the payment app company’s expenses rose more than expected and its cash flow declined.
“Online branded checkout growth has held steady in the mid-single digits for the last several quarters, and Q3 performance so far has been consistent with that trend,” said a September 29 newsletter by PayPal.
“In Q2, we noted some tariff-related headwinds, particularly related to cross-border ecommerce from China, though these have since moderated,” said the newsletter. “At the same time, we are closely monitoring the macro environment. At various times during the third quarter, we’ve seen some pockets of softer consumer spending in different parts of the globe.”
“Based on the net impact of all these factors, we currently expect another quarter of branded checkout volume growth squarely in the mid-single digits, in-line with the 5% we reported in Q2,” added the newsletter.
Earlier this month, Wolfe Research downgraded shares of PayPal, citing concerns that momentum in the company’s branded checkout business may take longer to materialize than investors expect.
Analyst Darrin Peller said that while management has made progress on initiatives such as modern checkout, Venmo integration and capital discipline, questions remain about PayPal’s ability to deliver consistent branded growth of around 7%.
“Shares may remain rangebound until PYPL demonstrates its ability to consistently deliver branded growth, even as we acknowledge relatively sound EPS growth,” Peller wrote. He trimmed his year-end 2026 fair value estimate to a range of $70-$80, from a prior price target of $85.
However, the average Wall Street analysts rating on the stock is Buy, with an average price target of $81.75.
The stock is down ~17% year-to-date, but is currently trading 3% above its 20-day simple moving average.
Seeking Alpha’s Quant Rating system grades the stock as Hold, with a score of 3.35 on a scale of 5. The quantitative measuring system assigns to the stock a D+ For Valuation, C for Growth, A- for Profitability, D for Momentum, and B for Revisions.
“The company’s checkout button is its core profit driver, which generates nearly 80% of its profits,” noted SA analyst Mehmood P. Bakhsh. “Big players like Apple Pay, as well as Google Pay, are growing on mobile, and merchants are selecting cheaper options. Since profits are so concentrated in checkouts, a small market share loss can significantly hit its earnings.”
On the other hand, SA authors on average see the stock as Buy.
“PayPal management emphasized in a recent September conference about its confidence in achieving its +8% branded checkout growth, while also suggesting that the margins of dilutive unbranded business have likely bottomed out,” said SA contributor JR Research.
“In essence, I think management wants to make it clearer that we should have seen the worst in PYPL’s growth deceleration, paving the way for the fintech company to regain clout among its peers,” added the author.
Insiders have been net sellers during Q3, with five insider sell transactions reported in the last three months against zero open market buys.
Short interest on PYPL stood at a high rate of 4.05% of the shares float as of October 15.