Investing Club: Dueling Wall Street notes on PayPal — here's where Cramer stands

Published Wed, Mar 9 20224:09 PM EST

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

Embattled Club holding PayPal (PYPL) caught conflicting research notes Wednesday: Bank of America downgraded the stock and cut its price target, while Morgan Stanley reaffirmed its buy rating and price target. Our bottom line We've been transparent about the PayPal disaster — apologizing to members for getting it wrong but hopeful there might be a way to mitigate the damage. Jim Cramer said this Wednesday: "We have been waiting for a sign that PayPal recognizes its faults and is reestablishing credibility, which is shot." PayPal CEO Dan Schulman made positive comments about the company on "Mad Money" back in November. After the stock plunged last month on a disappointing quarterly earnings release and outlook, Cramer said management's creditability is on the line. Cramer also took Schulman to task, saying he's "disappointed a lot of people, including me, and we need to see some redemption before we would buy more." Bank of America cuts price target Here are some of the numbers and some commentary behind Bank of America's downgrade of PayPal to hold from buy and its price target cut to $107 per share from $175. 2022 non-GAAP EPS estimate of $4.41, down from $4.68 2022 revenue growth estimate of 13.2%, previously 15.1% 2023 non-GAAP EPS estimate of $5.41, prior had been $5.87 2023 revenue growth estimate of 19.4%, previously 21.4% It's no secret PayPal shares have been crushed lately, down 48% year to date. But what's driving BofA's call? Analysts highlight four primary concerns that make it "increasingly difficult to recommend investors add to positions" in PayPal. This year is a transition year for PayPal, as the company emphasizes average revenue per user growth (ARPU) over new customer additions. They point out it's taking place against the backdrop of inflation and supply chain snarls, which impact consumer spending. The Russia-Ukraine war adds difficulty to PayPal's plans to focus on ARPU and various growth initiatives such as buy now, pay later and cryptocurrencies. The stock may end up trading sideways "in the near-term" because it