PayPal Rangebound Ahead of Wednesday Report

PayPal Holdings Inc. (PYPL) reports Q1 2021 earnings after Wednesday’s closing bell, with analysts looking for a profit of $1.01 per-share on $5.9 billion in revenue. If met, earnings-per-share (EPS) will mark a 53% increase in profit compared to the same quarter last year. The stock surged 7.4% in February after beating Q4 2020 top and bottom line estimates but topped out a few sessions later and has been rangebound since that time.

Fintech Leadership Grows

The company benefited from 2020’s acceleration into digital transactions, posting a phenomenal 116% annual return. It’s added another 12% so far in 2021, with a surging U.S. economy and bullish fintech sentiment adding to the list of tailwinds. It’s now a recognized market leader in digital wallets, highlighted by this week’s news that Coinbase Global Inc. (COIN) will allow customers to buy crypto using debit and credit cards linked to their PayPal accounts.

Rosenblatt Securities analyst Sean Horgan called PayPal one of his top digital payment picks last week, maintaining a ‘Buy’ rating while raising the firm’s price target from $320 to $350. He’s looking for 30% upside compared to mid-April price levels, with the Venmo mobile payment division set to exceed a $900 million 2021 revenue target due to the surge in spending generated by massive stimulus in the United States.

Wall Street and Technical Outlook

Wall Street bulls have been pounding the tables since the second quarter of 2020, yielding a current ‘Buy’ rating based upon 36 ‘Buy’, 5 ‘Overweight’, 6 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets now range from a low of $241 to a Street-high $375 while the stock closed Friday’s U.S. session more than $50 below the median $313 target. This low placement raises odds for a high percentage rally if earnings exceed expectations this week.

PayPal broke out above the 2019 high at 121.48 in May 2020 and entered a powerful trend advance that stalled just above 200 in September. Bullish action cleared that barrier in December, yielding a vertical rally impulse that posted an all-time high at 309.14 in February. The subsequent downdraft found support at 223 in March while price action since that time has been stuck within those boundaries, which are likely to persist through the second quarter.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.