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PayPal (PYPL) is scheduled to report results of its first fiscal quarter after market close on May 8, with a conference call scheduled for 5:00 pm EDT. What to watch for:

UPSIDE TO Q1 ESTIMATES: Even as macroeconomic concerns continue to weigh on broader market sentiment, e-commerce growth appears to be trending better-than-expected to start the year, Deutsche Bank tells investors in a research note. As a result, the firm expects upside to PayPal's Q1 estimates. However, the most important debate surrounding the stock remains whether or not PayPal is losing market share, Deutsche says. It expects PayPal will raise the low end of revenue growth expectations for fiscal 2023 from 5% to 7% and its earnings guidance to increase to 20% year-over-year growth from 18%. The firm increased estimates, while keeping a Buy rating on PayPal with a $100 price target.

SOLID Q1 REVENUE, EPS: Based on the data Wells Fargo is seeing, the firm expects PayPal's Q1 revenue and EPS will be solid, and could potentially surprise to the upside. The stock appears undervalued here at 13.5--times Wells’ 2024 EPS. The firm keeps an Overweight rating on the shares with a price target of $97.

SIZABLE UPSIDE TO 2023 EARNINGS: Last month, Mizuho lowered the firm's price target on PayPal to $92 from $100 but kept a Buy rating on the shares. The firm's web traffic analysis points to incremental softness in branded checkout in March. Assessing outgoing web traffic from key PayPal partners like Etsy (ETSY) and Nike (NKE) indicates a further step-down in its share of traffic, Mizuho told investors in a research note. However, Mizuho believes PayPal's "conservative" guidance and high fixed cost basis should help drive "sizable upside" to 2023 earnings. It views the company's upcoming new CEO announcement as another potential catalyst.

STRENGTH ‘BEYOND EXPECTED’: While speaking back in March at the Morgan Stanley Technology, Media & Telecom Conference, PayPal CEO Dan Schulman stated in part, according to a transcript of the event, "In terms of kind of the economy and e-commerce, I said a month ago when we reported Q4 that the quarter was off to a strong start. And here we are about a month later, and I would reiterate that again. I think across our business, we're seeing strength that's beyond what we expected. Both branded checkout is accelerating. Unbranded, it's doing quite well. So we're either beginning to see the beginning of a turn of e-commerce. The inflation cooling slightly. Maybe discretionary spend coming back. Maybe our products really taking an impact in the market.

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