PayPal 3Q17 earnings are set for release after closing bell tonight, and Wall Street is anticipating earnings of 43 cents per share on $3.17 billion in revenue. In last year’s third quarter, the digital payments processor reported earnings of 35 cents per share on $2.667 billion in revenue.
PayPal stock declined by more than 1% during regular trading hours today, falling as low as $66.16. However, the company’s market capitalization surpassed that of American Express briefly, The Wall Street Journal said on Wednesday, which is quite a run since it was spun off from eBay two years ago. The stock has been trending lower all week.
Analysts in general are quite positive on PayPal and its third-quarter results. Jefferies analyst Ramsey El-Assal said in a note on Friday that he saw little reason to expect the PayPal 3Q17 earnings release to trigger upside to its stock because of how high it had gotten up to that date. However, he still said that PayPal stock is his pick out of the Payments, Processors & IT Services stocks that he covers and sees the company as well-positioned going into the report.
On the earnings call tonight, he expects to get an early read on how the company’s Pay with Venmo plan is being received and hear progress on the company’s shift toward an asset-lite model. He also wants updates on other possible global partnerships, management commentary on mergers and acquisitions and an update on margin expansion drivers.
KeyBanc analyst Josh Beck also has PayPal listed as one of his topic picks going into the third-quarter reporting period. Like El-Assal, he wants to hear more about the Pay with Venmo launch, which triggered a price target increase from Beck, along with strong e-commerce sales. Beck’s new price target for PayPal stock is $75. He believes that consumer choice may be “an underappreciated international tailwind and believes that consumer choice momentum “expands the pie.”
If PayPal 3Q17 earnings beat estimates and the company “nudges” its full-year estimates up while “providing constructive choice, Venmo, and credit updates,” the company’s stock could rise, Beck says. On the other hand, he says if PayPal 3Q17 earnings are just in line with expectations and if the company provides any “disappointing updates on choice, Venmo, or credit,” the company’s stock could decline. However, he’s generally expecting a beat-and-raise report from PayPal.