Image Source: Pexels

PayPal (PYPL) is scheduled to report results of its fourth fiscal quarter after market close on February 7, with a conference call scheduled for 5:00 pm EDT. What to watch for:

PATIENCE REQUIRED: On Monday, JPMorgan lowered the firm's price target on PayPal to $75 from $80, while keeping an Overweight rating on the shares ahead of the Q4 report. The firm feels "relatively comfortable" with Q4 estimates and expects "all eyes" to be on management's strategic framework and fiscal 2024 outlook. The firm continues to see a positive risk/reward given new leadership but says patience will likely be required before underlying trends improve.

Also keeping a Buy rating on the shares, Monness Crespi also lowered the firm's price target on PayPal to $95 from $100. The firm, which is "touching up estimates" ahead of the company's Q4 report, noted that its views are in line with the Street at net revenue of $7.91B, EBITDA of $2.11B and EPS of $1.36. The firm expects "a relatively clean/inline Q4 2023 print" as concerns and data highlighting branded share loss are baked into estimates.

LAYOFFS: PayPal plans to cut its workforce by roughly 9% this year as CEO Alex Chriss struggles with increasing competition, Bloomberg's Paige Smith reported late last month. In letter to staff, Chriss said the move was made to "right-size" the payments processing firm through both direct job cuts and the elimination of open positions through 2024, the author says, adding that affected workers will be notified by the end of the week.

Following the news reports, Monness Crespi said the figure surpasses last year's roughly 2,000 layoffs and would bring headcount to about 25,000. The firm, which believes such a headcount reduction should serve as "a meaningful source of operating leverage," calls the reported move a "promising first step to driving profitable growth."

EXPECTATIONS: During the company's last earnings call, PayPal said that it saw Q4 adjusted Eps $1.36, versus consensus at the time at $1.41. The company also said it saw Q4 revenue up 6%-7% on a spot basis and 7%-8% FXN. For the full year 2023, PayPal told investors it saw adjusted EPS of $4.98, with consensus at the time at $4.95.

Current consensus EPS and revenue forecasts for PayPal's December-end quarter stand at $1.27 and $7.33B, respectively, according to data from Yahoo Finance. The consensus EPS and revenue forecasts for the company's full year 2023 stand at $4.61 and $27.57B, respectively.

More By This Author:

What Wall Street Experts Are Saying About BABA Ahead Of Earnings
Maker Of Wilson Tennis Rackets Raises $1.37 Billion In Discounted IPO
Wall Street's Top 10 Stock Calls This Week - Saturday, Feb. 3