- Mizuho analyst Dan Dolev reiterated Buy on PayPal Holdings, Inc (NASDAQ:PYPL) with a price target of $105.
- PYPL shared plans to reduce headcount by ~7%, or 2,000 employees.
- With over 30,000 employees, the analyst believes PYPL was overstaffed, so a leaner cost structure should be well-received.
- The analyst estimated that reducing headcount by 2,000 could drive roughly $400 million in cost savings or 100-150 bps margin upside.
- The analyst believes these cuts were needed, as they should help PYPL get more on par with peers like Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) regarding employee efficiency.
- The analyst estimated that in 2021, PYPL generated ~$500K of revenue per employee vs. $500-600K at Adyen and $750K-$1M+ at the networks.
- PYPL blames the “challenging macro-economic environment” as a key reason for the cost reduction.
- The comments appear more cautious vs. the more upbeat commentary by V and MA management last week about the general macro.
- Given the recent challenges, the price target reflected a discount to V & MA.
- Price Action: PYPL shares traded lower by 1.80% at $80.02 on the last check Wednesday.
Nasdaq, S&P 500 Surge Ahead Of Market Open As US Stocks Look To Fight Back After Sell-Off: Nike And Peers In Focus
The major U.S. index futures point to a positive start on Friday, reversing the sharp declines in the previous session. The week witnessed see-sawing movement in the market and it remains to be seen if the indices can rally hard to close the week in the green.
