Recent expansion efforts highlight the partnership between PayPal Holdings and Coinbase Global to advance the adoption of the PayPal USD stablecoin, PYUSD, which has likely added positive sentiment to PayPal’s shares. Over the past week, PayPal’s stock price rose 3.7%, tracking closely with the tech-heavy Nasdaq Composite, which gained 2.3%. Meanwhile, the overall market exhibited positive movement, largely buoyed by strong earnings reports and positive macroeconomic indicators. The absence of platform fees for Coinbase's PYUSD users and the capability for 1:1 USD conversions enhance PayPal's position in the digital currency space, potentially sustaining investor confidence during the period.

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The recent partnership between PayPal Holdings and Coinbase Global to integrate the PayPal USD stablecoin has injected favorable sentiment into PayPal's shares. However, over the past year up until today, the company's total return, including share price and dividends, decreased by 3.67%. This decline contrasts with the broader US diversified financial industry, which saw a 19% return over the same period, highlighting PayPal’s underperformance relative to its peers.

The ongoing collaboration with Coinbase and enhancements like Venmo monetization are likely to influence future revenue and earnings positively, as analysts anticipate annual revenue growth of approximately 5% and earnings growth of around 7.6% annually. Nonetheless, these growth forecasts face challenges like potential renegotiation pressures and global economic uncertainties, which could hinder revenue progression and affect earnings margins.

In terms of valuation, PayPal’s current stock price of US$61.42 is at a 27.9% discount to the consensus analyst price target of US$85.24. If the company achieves an earnings increase to US$5.3 billion by 2028, trading at a projected PE ratio of 16.3x, the price target could be realized. This context should encourage investors to carefully assess their assumptions against these forecasts and market conditions.

Review our historical performance report to gain insights into PayPal Holdings' track record.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NasdaqGS:PYPL.

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