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PayPal (PYPL) is scheduled to report results of its third fiscal quarter after market close on November 1, with a conference call scheduled for 5:00 pm EDT. 

TARGET CUT AHEAD OF EARNINGS: Truist recently lowered the firm's price target on PayPal to $70 from $85, while keeping a Buy rating on the shares as part of a broader research note previewing Q3 earnings in FinTech. Many of the firm's covered names are slumping, and while broadly constructive, Q3 results may not be catalysts for some of its "favorite laggard ideas," the firm tells investors in a research note. Truist also believes that the challenges, including competition, commoditization, price pressure, and investments needed to move up-market and into more complex SMBs will not quickly abate. The firm adds that looking into next year, it sees a modestly improving branded volume growth for PayPal, also noting that the moderating Braintree expansion and better data monetization will moderate transaction % decline.

REIGN FADING: Wells Fargo initiated coverage of PayPal on Monday with an Equal Weight rating and $55 price target. The firm's channel checks suggest PayPal is "increasingly aggressive in capturing and defending share." However, Wells questions whether this approach can deliver margin expansion and revitalize the company's sales simultaneously. The firm sees PayPal's "reign as the unquestioned leader fading."

HSBC also started coverage of PayPal with a Buy rating and $69 price target. The shift from paper to digital forms payments has been profound, and it will continue, the firm tells investors in a research note. HSBC recommends investing in high quality, turnarounds, and "deep value" with in the U.S. payments and consumer finance sector. The firm is concerned about the pace of growth of digital transactions given that the pandemic may have pulled this shift forward. This makes it less constructive than consensus on Visa (V) and Mastercard (MA).

Meanwhile, PayPal coverage was assumed by a new analyst at UBS with a Neutral rating and $63 price target. UBS believes software-led distribution is increasingly becoming the channel required to participate in the 70% of industry revenues sourced via underlying small businesses, of which the vast majority could ultimately be running through a software platform longer-term. Those best positioned will either be owners of the software or the preferred partners to these software companies in embedding and monetization-enhancing financial services across multiple channels, products, and geographies, the analyst tells investors in a research note. UBS also expects continued high single digit to low double digit compounding medium-term revenue growth for Visa and Mastercard.

WHAT'S NOTABLE: UPS (UPS) announced that it has entered into an agreement to acquire Happy Returns from PayPal. Happy Returns is a U.S.-based software and reverse logistics company that enables frictionless, no-box, no-label returns for merchants and consumers. "We know that returns have long frustrated shoppers and retailers looking for quick and easy solutions," UPS CEO Carol B. Tome said. "By combining Happy Returns' easy digital experience and established drop-off points with UPS's small package network and footprint of close to 5,200 The UPS Store locations, box-free, label-free returns will soon be available at more than 12,000 convenient locations in the U.S." The acquisition of Happy Returns is expected to close in the fourth quarter of 2023, subject to customary conditions and regulatory approvals. Terms of the acquisition were not disclosed.

OUTLOOK: During the company's last earnings call, PayPal said that it saw Q3 adjusted EPS of $1.22-$1.24, with consensus at $$1.16. The company also said it expected Q3 net revenues to grow ~8% on a spot and FXN basis to ~$7.4B. Additionally, PayPal backed its FY23 EPS view of about $4.95, with consensus of $4.64.

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