PayPal shares may have lost roughly two-thirds of their value last year, but Truist remains optimistic about e-commerce momentum and sees the possibility of another management shift.

Following the worst year on record for PayPal Holdings Inc. shares, Truist Securities analyst Andrew Jeffrey believes investors continue to have a pessimistic view of the digital payment company’s future.

Regarding the report from The Motley Fool, PayPal’s stock fell 62% in 2022, arguably the company’s worst year since its 2015 split from eBay Inc. (EBAY). PayPal (PYPL), long a financial darling, battled with a post-COVID hangover as well as growing investor concerns about competition in online checkout.

Truist’s Jeffrey, on the other hand, sees a better future for the stock, upgrading it to buy from hold on Tuesday and raising his price objective to $95 from $75.

“We argue that investors are overly pessimistic about PayPal’s long-term organic [revenue] growth,” he wrote in a note to clients.

While Jeffrey shares Wall Street’s concerns about competition and increasing contributions from PayPal’s lower-yielding Braintree division, he believes that “resurgent” growth in e-commerce can maintain long-term organic revenue growth of at least 10%.

Jeffrey agrees that macroeconomic conditions may be a headwind for e-commerce trends, but he expects this type of shopping to continue to gain share from “card-present” forms, the payments-industry term for in-store shopping.

Last year, PayPal lowered expectations, but Jeffrey now believes Wall Street’s revenue predictions are “realistic.” Furthermore, he is positive about the company’s newfound focus on expense containment, and he points out that the company’s almost $6 billion in net cash provides PayPal with more repurchase options as well as firepower for possible mergers.

Finally, he stated that he “would not be surprised” if more changes occurred in PayPal’s management ranks this year.

Last April, the company’s former chief financial officer, John Rainey, left for Walmart Inc. (WMT). Meanwhile, the current CEO, Dan Schulman, will turn 65 soon, and Jeffrey believes “he might leave PayPal with his legacy intact.“

“A new CEO, in our opinion, would be positioned to capitalize on Mr. Schulman’s performance while also wielding a freer M&A hand, possibly bringing the company into card-present acquiring, expanding its TAM [total addressable market], and accelerating terminal rev/EPS growth,” he wrote.

PayPal shares are up 4.3% in Tuesday afternoon trading, outperforming the S&P 500.

PayPal is confronted with issues such as declining user growth and slower payment volume growth. These issues could exacerbate if there is a recession in 2023.

Nonetheless, the corporation is still extremely lucrative, with a free-cash-flow margin of 26% in the third quarter of 2022 and in the coming year, management intends to use that cash flow to reward shareholders through share repurchases. As a result, this may be an excellent moment to purchase PayPal shares.

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