PayPal Stock: Why Wall Street May Be Undervaluing This Giant

Core Viewpoint - The market may misprice certain stocks, creating opportunities for investors to buy undervalued companies like PayPal, which has been overlooked despite its strong fundamentals [1][13]. Company Overview - PayPal Holdings Inc. (NASDAQ: PYPL) is currently trading at $67.06, down 3.76% from the previous day, and is at 72% of its 52-week high of $93.66 [2]. - The stock has experienced a year-to-date decline of 21.2%, raising concerns about its fundamentals, but recent earnings suggest otherwise [4]. Financial Performance - PayPal's revenue increased by 5% year-over-year to $8.3 billion, which is notable given the economic challenges during the quarter [5]. - Total payment volume rose by 6% year-over-year to $443.5 billion, indicating deepening network effects and increased transactions among existing customers [6]. - Earnings per share (EPS) grew by 20% to $1.40, surpassing the consensus estimate of $1.30, reflecting effective cost management and operational efficiency [7]. Market Outlook - Analysts project a 12-month price target of $84.50 for PayPal, indicating a potential upside of 26% from current levels, with some analysts forecasting targets as high as $100 [8][9]. - Institutional investors are showing confidence in PayPal, with Amiral Gestion increasing its holdings by 131% to $23 million, suggesting a belief in the company's long-term potential [9]. Future Expectations - Wall Street anticipates EPS of $1.54 for Q2 2026, representing a 10% increase from the latest earnings, supported by a favorable macroeconomic environment due to the Federal Reserve's easing cycle [10]. - PayPal's scale and user engagement create a robust growth engine that is not fully reflected in its current valuation, making it an attractive opportunity for contrarian investors [11][12].