Payments processing companies are a dime a dozen, but PayPal remains the most widely respected and universally popular payments option. In recent years, PayPal has upgraded its payment/receipts services to allow individuals and companies to effectively, efficiently and securely transfer funds to buyers, suppliers, customers and banks. Such is the appeal of PayPal that it is ranked as the #1 most recognisable online payments brand in the world. PayPal Holdings Inc (PYPL) has a market capitalisation of $43.86 billion and a price-earnings ratio of 35.87. The earnings per share (EPS) is 1.00.

PayPal Bullish Engulfing Pattern

There has been widespread discussion about whether to buy or sell PayPal given the recent earnings reports. At the end of January 2016, PayPal released its Q4 earnings of $0.36 p/s with sales of $2.6 billion. The consensus estimate was $0.35 p/s with sales in the region of $2.51 billion. PayPal also posted a Y-o-Y earnings increase of 27%. For Q1, 2016 PayPal is anticipating EPS of $0.34 – $0.36 and the EPS for the fiscal year is expected to be in the range of $1.45 – $1.50. Additionally, PayPal has planned to purchase as much as $2 billion in stocks (buybacks) to ramp up the share price and boost investor confidence in the stock.

PayPal stock is currently entering an interesting phase known as a bullish engulfing stage. It is evident from the chart that there is a slight downtrend developing and this has taken prices from over $36.50 p/s to $35.78. There is an opportunity to buy at a new low around $35.78 and the bearish momentum has all but disappeared at this point. In terms of technical analysis of PayPal Holdings Inc (PYPL) we can draw the following conclusions:

• Based on the moving averages PayPal is a strong buy (Daily Timeframe)

Technical Indicators including: RSI, STOCH, MACD, ADX, Williams%R, Ultimate Oscillator and Bull/Bear, PayPal ranks as astrong buy

• Based on the technical indicators PayPal is a strong buy (Daily Timeframe)

Moving Averages including: MA5, MA10, MA20, MA50, MA100, MA200 are all strong buys

Recently, it was announced that PayPal’s Venmo platform raised an incredible $1 billion in payments processing in January 2016. This free-to-use wallet is in the infancy stages of its development and the company’s Y-o-Y growth spiked by 250% during January 2016. This is a remarkable feat and one which has boosted PayPal’s stock price and will likely add tremendous value to the company. Owing to the solid performance of this business, PayPal share prices are going to invariably rise and this bodes well for binary options traders too – with call options.

The Takeaway

Based on the consensus opinions of analysts, the vast majority agree that on a day-to-day basis PayPal stock is a buy. If we shift our attention to mean recommendation data, it is clear that PayPal is performing strongly. The stock has been rated at 2.1 on a ratings scale where 1.0 is a strong buy and 5.0 is a strong sell. The high target price for PayPal is $50 per share and the low target price for PayPal is $31 per share. Note that the low target price is close to the prevailing stock price of $35.76, it’s an indication that PayPal is perhaps undervalued.

There have also been some interesting recent upgrades for PayPal. On the 25 January 2016, Monness Crespi & Hardt upgraded PayPal from a sell to a neutral. And on the 28 January 2016, Wedbush upgraded PayPal from a neutral to an outperform. These bode well for those invested in PayPal, but more importantly as a binary options trader you will be emboldened by this news to and might consider call options on PayPal stocks.