What to watch in PayPal earnings report

Photo courtesy of PayPal. 

PayPal (PYPL) is scheduled to report results of its fourth fiscal quarter after market close on February 3, with a conference call scheduled for 5:00 pm EDT. What to watch for:

1. OUTLOOK: During the company's last earnings call, PayPal said it expects fiscal year 2020 GAAP earnings per diluted share to grow in the range of 37%-38%, and non-GAAP earnings per diluted share to grow in the range of 27%-28%. PayPal also expects TPV growth to be approximately 30% in fiscal year 2020, and revenue to grow in the range of 20%-21% at current spot rates and 21%-22% on an FXN basis. For the fourth quarter, expects TPV growth on a percentage basis to be in the range of low to mid 30%. The company also expects revenue to grow in the range of 20%-25% at current spot rates and 20%-25% on an FXN basis, GAAP earnings per diluted share to grow in the range of 45%-47%, and non-GAAP earnings per diluted share to grow in the range of 17%-18%.

2. TARGET RAISED AHEAD OF EARNINGS: Last week, Morgan Stanley analyst James Faucette raised his price target on PayPal to $297 from $229, while keeping an Overweight rating on the shares ahead of the company's upcoming earnings report. Nonetheless, he advised that near-term volatility could be seen going into fourth-quarter earnings and the company's investor day. PayPal's acceptance at the top 500 U.S. internet retailers rose to 80% from 79% last quarter while it maintained "industry low attrition," Faucette he added.

3. BUY, SELL CRYPTOCURRENCY: Back in November, PayPal announced that all eligible PayPal accountholders in the U.S. could buy, hold and sell cryptocurrency directly with PayPal. The feature was already partially available in the U.S. before, but PayPal had been putting interested customers on a waitlist. With the update, users will no longer have to wait for a spot to open.

4. GROWTH STORY: On January 20, BTIG analyst Mark Palmer upgraded PayPal to Buy from Neutral with a $300 price target. The analyst stated that he expects the company's growth story to be sustained amid a shift toward digital payments, which has been accelerated by the pandemic. Palmer added that PayPal's long-term growth trajectory has steepened with the announcement that its 333M active users would be able to buy, hold and sell Bitcoin and other cryptocurrencies using their PayPal digital wallets.