4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Forward P/E as on February 28: ~14.2x
10-Year Sales Growth: ~14.7%
Number of Hedge Fund Holders: 94
PayPal Holdings, Inc. (NASDAQ:PYPL) operates a technology platform enabling digital payments for merchants and consumers. Gustavo Gala from Monness reiterated a “Buy” rating on the company’s stock with a price target of $120.00. The rating is backed by a combination of factors highlighting the company’s strong growth potential and strategic initiatives. PayPal Holdings, Inc. (NASDAQ:PYPL) is expected to see strong growth in transaction margins and EPS by 2027, courtesy of enhancements in checkout process and higher monetization of Venmo.
Furthermore, PayPal Holdings, Inc. (NASDAQ:PYPL)’s partnership with VeriFone can expand into brick-and-mortar locations and the roll-out of new functionalities for merchants is projected to improve customer engagement and fuel revenue growth, says the analyst. Its focus on Buy Now, Pay Later services, together with the integration of agentic AI to personalize consumer experiences, can act as potential growth drivers. PayPal Holdings, Inc. (NASDAQ:PYPL)’s strategic restructuring and platformization efforts are projected to improve cost structures and ramp up product iterations, resulting in better-targeted offerings and healthier customer engagement. As per the analyst, given the robust financial outlook and a strong plan for sustainable growth, PayPal Holdings, Inc. (NASDAQ:PYPL)’s shares are considered undervalued.
Longleaf Partners, managed by Southeastern Asset Management, released its Q4 2024 investor letter. Here is what the fund said:
“PayPal Holdings, Inc. (NASDAQ:PYPL) – Digital payments platform PayPal was a contributor for the quarter and the year. The company delivered strong results, with gross margin dollars continuing to grow in the mid-high single digits for the last few quarters. Effective cost management further contributed to double-digit FCF growth, a key metric in our analysis. PayPal also demonstrated its commitment to enhancing shareholder value by repurchasing shares at a 10% annualized basis in the most recent quarter, leading to even stronger FCF per share growth. Much of what we envisioned at our initial investment has materialized quicker than anticipated. This strong performance has been driven by the improved leadership of relatively new CEO Alex Chriss.”
