{"id":72608,"date":"2023-10-14T13:52:54","date_gmt":"2023-10-14T17:52:54","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/paypal-versus-block-heres-hsbcs-preferred-stock-play-on-a-fintech-turnaround\/"},"modified":"2023-10-14T13:52:57","modified_gmt":"2023-10-14T17:52:57","slug":"paypal-versus-block-heres-hsbcs-preferred-stock-play-on-a-fintech-turnaround","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=72608","title":{"rendered":"PayPal versus Block: Here\u2019s HSBC\u2019s preferred stock play on a fintech turnaround"},"content":{"rendered":"
\n

It\u2019s been another tough year for shares of PayPal Holdings Inc. and Block Inc., which have respectively lost 22% and 31% so far in 2023, after recording their worst annual performances on record last year. <\/p>\n

Bulls are hoping that both names can stage financial comebacks in the near future, as PayPal
\n PYPL,
\n -1.07%<\/bg-quote>
\n enters its next chapter under newly installed Chief Executive Alex Chriss and Block
\n SQ,
\n -5.02%<\/bg-quote>
\n continues to execute on its expense-control strategy. But PayPal\u2019s stock looks like the preferred turnaround play, according to HSBC analyst Saul Martinez, who initiated coverage on a basket of payments names in a recent note to clients. <\/p>\n

\n

\u201cAdmittedly, the shine has come off the stock,\u201d Martinez wrote of PayPal in his latest report, but the stock\u2019s \u201cdiscounted valuation offers opportunity.\u201d<\/p>\n

He cheered PayPal\u2019s strong consumer and merchant assets, as well as its potential to ease pressure on transaction margins later this year and into next year. Meanwhile, the company could benefit from continued cost discipline and its capital-return strategy. <\/p>\n

PayPal\u2019s transaction margins have been a source of anguish for investors, as the company has been seeing faster growth from its lower-margin unbranded checkout business. But Martinez is upbeat that the branded business can \u201cmoderately\u201d reaccelerate on the heels of an improvement in e-commerce trends. <\/p>\n

Additionally, PayPal could improve the margins of the unbranded business by selling that service to more small and medium-size businesses, rather than larger enterprises that tend to be able to secure more favorable economics for themselves. <\/p>\n

Martinez set a buy rating and $69 price target on PayPal shares.<\/p>\n

Read: <\/strong>PayPal skeptics may be making a crucial mistake about the stock, Barclays says<\/p>\n

As for Block, Martinez said that the company\u2019s ecosystem is \u201cimpressive\u201d but that he still sees the name as a \u201cshow-me story.\u201d <\/p>\n

\u201cWhile Block is now breaking even on operating profits, the path to more normalized profitability is likely to be long, in our view,\u201d he wrote. <\/p>\n

Block shares are off more than 80% from their all-time closing high achieved in August 2021, but he thinks the stock is \u201ctaking time to grow into a reasonable multiple.\u201d<\/p>\n

Martinez set a hold rating and $46 target price on Block\u2019s stock.<\/p>\n

Don\u2019t miss:<\/strong> Block\u2019s stock has more than 50% upside after a \u2018massive pullback,\u2019 BofA predicts<\/p>\n

See also: <\/strong>PayPal\u2019s stock has \u2018catalysts aplenty\u2019 \u2014 but this analyst still feels cautious<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s been another tough year for shares of PayPal Holdings Inc. and Block Inc., which have respectively lost 22% and 31% so far in 2023, after recording their worst annual performances on record last year. Bulls are hoping that both names can stage financial comebacks in the near future, as PayPal PYPL, -1.07% enters its […]<\/p>\n","protected":false},"author":1,"featured_media":5226,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-72608","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nPayPal versus Block: Here\u2019s HSBC\u2019s preferred stock play on a fintech turnaround | iFintechWorld<\/title>\n<meta name=\"description\" content=\"It\u2019s been another tough year for shares of PayPal Holdings Inc. and Block Inc., which have respectively lost 22% and 31% so far in 2023, after recording\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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