PayPay Corporation Just Missed Earnings - But Analysts Have Updated Their Models

The quarterly results for PayPay Corporation (NASDAQ:PAYP) were released last week, making it a good time to revisit its performance. It was not a great result overall. Although revenues beat expectations, hitting JP¥118b, statutory earnings missed analyst forecasts by 18%, coming in at just JP¥25.42 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the consensus forecast from PayPay's twelve analysts is for revenues of JP¥471.7b in 2027. This reflects a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 23% to JP¥123. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥471.7b and earnings per share (EPS) of JP¥123 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

Check out our latest analysis for PayPay

The analysts reconfirmed their price target of US$23.97, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values PayPay at US$31.63 per share, while the most bearish prices it at US$16.91. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that PayPay's revenue growth is expected to slow, with the forecast 22% annualised growth rate until the end of 2027 being well below the historical 27% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% annually. So it's pretty clear that, while PayPay's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$23.97, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple PayPay analysts - going out to 2029, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for PayPay that you should be aware of.

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