PYPL – Market expectations are for Uniform ROA to fade, and management may have concerns about growth, margins, M&A, and eBay payments migration

PayPal Holdings (PYPL) currently trades above corporate and historical averages relative to Uniform earnings, with a 39.4x Uniform P/E (Fwd. V/E’).

At these levels, markets are pricing in expectations for Uniform ROA to fade to 27%, accompanied by 15% Uniform asset growth.

Meanwhile, analysts expect Uniform ROA to decline to 22% levels in 2022, accompanied by 53% Uniform asset growth.

If sustained going forward, these levels would imply a stock price closer to $500, representing significant potential equity upside for the firm.

That said, analyst growth projections consider recent M&A activity, suggesting these levels are not sustainable going forward.

Moreover, the firm’s most recent earnings call suggests management may have concerns about growth, margins, M&A, and eBay payments migration.