According to TheFly, analysts at Rothschild & Co Redburn downgraded PayPal to ‘Sell’ from ‘Neutral’ and lowered the price target to $50 from $70.
- On Tuesday, Cantor Fitzgerald initiated coverage of PayPal with a ‘neutral’ rating and a $60 price target.
- The firm notes that while PayPal’s recent strategic initiatives have created a more balanced, profitable growth engine, competitive pressures remain “intense” for the company.
- Earlier this month, analysts at TD Cowen lowered their price target for PayPal’s shares to $65 from $80, while keeping a ‘Hold’ rating on the stock.
PayPal Holdings Inc. (PYPL) shares are in focus on Wednesday after analysts downgraded the stock amid intensifying competition and changing customer choices.
According to TheFly, analysts at Rothschild & Co Redburn downgraded PayPal to ‘Sell’ from ‘Neutral’ and lowered the price target to $50 from $70. The firm’s new price target implies a downside of around 10% from PYPL’s Tuesday closing price of $55.51.
Why Did PYPL Get A Downgrade?
Rothschild analysts noted that PayPal is facing growing competition from both startups and established players in the payments sector. This includes Shopify Inc.’s (SHOP) Shop Pay and Stripe Inc.’s Link, as well as offerings such as Apple Pay and Google Pay.
According to the firm, the “marginal consumer” is choosing these payment methods more often than in the past. It sees the aforementioned PayPal rivals as winning the incremental user.
On Tuesday, Cantor Fitzgerald initiated coverage of PayPal with a ‘neutral’ rating and a $60 price target. The firm notes that while PayPal’s recent strategic initiatives have created a more balanced, profitable growth engine, competitive pressures remain “intense” for the company.
Earlier this month, analysts at TD Cowen lowered their price target for PayPal’s shares to $65 from $80, while keeping a ‘Hold’ rating on the stock. The firm stated that while PayPal remains on a stable fundamental footing, it does not expect the payments company’s fourth-quarter (Q4) results to deliver “material catalysts” for many investors.
PayPal’s Recent Strategic Initiatives
Last week, PayPal announced that it has entered into a definitive agreement to acquire agentic commerce startup Cymbio to boost its own offerings in the space. The company also stated that it had previously partnered with Cymbio to work on a suite of AI-powered commerce features.
“By making their product catalogs discoverable on AI surfaces, merchants can increase sales while expanding product choice to the millions of consumers shopping on AI platforms today,” said Michelle Gill, Executive Vice President and General Manager of Small Business and Financial Services at PayPal.
The company also rolled out a free do-it-yourself tax filing service for PayPal debit card customers, in partnership with the embedded tax platform, April.
Earlier this month, the company also joined hands with Microsoft Corp. (MSFT) to power the Copilot service with its technology to enable shoppers to discover, decide, and pay without ever leaving the Copilot experience.
How Stocktwits Users Reacted
PayPal shares were down nearly 1% in Wednesday’s pre-market trade. Retail sentiment on Stocktwits around the stock was in the ‘bullish’ territory, with message volumes at ‘high’ levels. PYPL stock was the second-most trending ticker on the platform at the time of writing.
One user said that PayPal is “clearly highly undervalued,” and that they are considering adding the company’s shares below $50.
However, one bearish user said PayPal's growth is not there, adding that they sold half their position in the stock.
PYPL stock is down 5% year-to-date and 38% over the past 12 months.
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