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MarketScreener Homepage  >  Equities  >  Nasdaq  >  PayPal Holdings    PYPL

PAYPAL HOLDINGS

(PYPL)
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Delayed Quote. Delayed Nasdaq - 09/20 04:00:00 pm
104.64 USD   -1.39%
09/20PAYPAL HOLDINGS : Good timing to go long again
09/19PAYPAL : Announces Pricing of Senior Notes Offering
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09/19PAYPAL : Announces Senior Notes Offering
PR
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News SummaryMost relevantAll newsOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

After Yield-Curve Inversion, Tech Stocks Look Promising

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08/16/2019 | 01:23pm EDT

By Michael Wursthorn

Technology stocks are up more than 25% this year, and some Wall Street analysts say the sector is a good refuge following worrying signs from the bond market.

But it all depends on where in tech investors put their money.

Tech stocks have a history of outperforming the broader market following a yield-curve inversion, analysts at Bank of America Merrill Lynch said. Since 1965, the sector, on average, beat broader benchmarks in the 12 months following such an event. So far this year, the S&P 500 is up 15%.

That record offers hope to investors after yields on the 10-year U.S. Treasury notes briefly fell on Wednesday below two-year yields. That type of inversion, the first since 2007, has been one of the stock market's most reliable signals of a recession since 1978, and it has investors and analysts alike scrambling to rejigger portfolios in case the economy starts sputtering.

Bank of America's analysts highlight Vanguard's Information Technology exchange-traded fund for its low expense ratio and price momentum. Besides that, the fund carries a lower exposure to the beleaguered semiconductor industry.

Looking deeper into tech, IT-services stocks have fared the best, rising 32% this year. That's no surprise when several companies in the group have reported some of the strongest earnings results for the second quarter. PayPal Holdings Inc., for example, increased earnings by 47% from a year earlier, while Automatic Data Processing's profit grew 22%.

Both stocks are up at least 26% on the year and have mostly weathered the latest bout of volatility.

But that performance comes at a premium. IT-services stocks look pricey, trading at 22 times earnings projected over the next 12 months -- near the group's highest levels in years and well above the broader tech sector and the S&P 500.

Only software stocks, which have risen nearly 29% this year, are more expensive, with a 24 times forward-looking P/E multiple.

Among the cheapest, but also the riskiest amid trade tensions and signs of economic weakness, are semiconductor stocks. They trade at 14 times their earnings. Second-quarter earnings have pulled back about 28% from a year earlier, and third-quarter earnings could contract even more, with analysts estimating a 30% pullback.

One bright spot is Nvidia Corp. The chip maker reported solid earnings thanks to a boost from gaming and raised its forecast for the year, sending shares up 6% on Friday. The stock is up 18% this year and analysts at Bank of America say the company has the potential to rise another 40%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AUTOMATIC DATA PROCESSING -0.03% 159.3 Delayed Quote.21.49%
DJ INDUSTRIAL -0.59% 26935.07 Delayed Quote.15.47%
NASDAQ 100 -0.99% 7823.553294 Delayed Quote.24.83%
NASDAQ COMP. -0.80% 8117.674437 Delayed Quote.23.32%
NVIDIA CORPORATION -2.40% 172.69 Delayed Quote.29.36%
PAYPAL HOLDINGS -1.39% 104.64 Delayed Quote.24.44%
S&P 500 -0.49% 2992.07 Delayed Quote.19.36%
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Financials (USD)
Sales 2019 17 730 M
EBIT 2019 4 036 M
Net income 2019 2 697 M
Finance 2019 7 201 M
Yield 2019 -
P/E ratio 2019 46,0x
P/E ratio 2020 41,0x
EV / Sales2019 6,54x
EV / Sales2020 5,44x
Capitalization 123 B
Chart PAYPAL HOLDINGS
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Technical analysis trends PAYPAL HOLDINGS
Short TermMid-TermLong Term
TrendsNeutralBearishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 42
Average target price 127,64  $
Last Close Price 104,64  $
Spread / Highest target 43,3%
Spread / Average Target 22,0%
Spread / Lowest Target -13,0%
EPS Revisions
Managers
NameTitle
Daniel H. Schulman President, Chief Executive Officer & Director
John J. Donahoe Chairman
William J. Ready Chief Operating Officer & Executive Vice President
John D. Rainey CFO & EVP-Global Customer Operations
Sri Shivananda Chief Technology Officer & Senior Vice President
Sector and Competitors
1st jan.Capitalization (M$)
PAYPAL HOLDINGS24.44%123 127
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MASTERCARD43.74%275 118
PALO ALTO NETWORKS INC10.57%20 198
AVAST36.06%4 733
MIMECAST LTD12.28%2 332