PayPal Holdings Inc. (PYPL) saw its stock price decline on Wednesday following the release of its third-quarter earnings report. While the company reported a positive increase in transaction volume, the revenue figures fell short of expectations, leading to a cautious response from investors.
Analysts offered a variety of perspectives on the company’s performance and outlook. Joseph Vafi, an analyst at Canaccord Genuity, maintained a Buy rating on PayPal while raising the price target from $80 to $96. He acknowledged the company’s ongoing efforts to streamline its operations under CEO Alex Chriss, noting improvements in Braintree’s margins despite some headwinds from contract negotiations. Vafi expressed optimism about PayPal’s future, highlighting initiatives like a new pricing strategy for unbranded checkout and expanded reach beyond e-commerce.
Will Nance of Goldman Sachs reiterated a Neutral rating on PayPal, increasing the price target from $79 to $87. Nance stated that while the Q3 results were generally in line with investor expectations, concerns about transaction margin guidance for 2025 were somewhat overblown. He believes PayPal’s new leadership team is aiming for realistic targets, focusing on delivering sustainable earnings growth and capital return while executing on self-help initiatives.
Rufus Hone from BMO Capital Markets reaffirmed a Market Perform rating on PayPal, raising the price target from $73 to $82. Hone highlighted the company’s efforts to enhance its branded checkout experience and improve conversion rates. However, he expressed caution about the potential impact of ongoing price-to-value efforts on Braintree’s volume and revenue in the short term, anticipating a rebound in 2025.
Daniel Perlin of RBC Capital Markets maintained an Outperform rating on PayPal, increasing the price target from $84 to $89. Perlin noted that PayPal’s adjusted earnings exceeded expectations at $1.20 per share, surpassing consensus of $1.07. Total payment volume also surpassed expectations at $423 billion, marking a 9% year-on-year increase. However, Perlin acknowledged that the company’s fourth-quarter guidance for low-single-digit revenue growth and a decline in earnings reflects the ongoing impact of Braintree’s merchant negotiations.
James Faucette, an analyst at Morgan Stanley, reiterated an Equal-Weight rating on PayPal, raising the price target from $71 to $76. Faucette expressed concern about the company’s guidance for 2025, suggesting that the expected acceleration in Branded and Venmo growth, along with contributions from Fastlane, will take time to materialize.
Mayank Tandon of Needham reaffirmed a Hold rating on PayPal. While Tandon recognized the company’s strong revenue growth of 5.8% year-on-year and a surge in total payment volume, he highlighted the impact of renegotiated Braintree merchant agreements on fourth-quarter guidance. He noted that management’s mixed guidance for the fourth quarter, despite raising full-year projections, reflects the company’s focus on driving long-term profitability.
Alex Markgraff of KeyBanc Capital Markets maintained a Sector Weight rating on PayPal. Markgraff observed that while PayPal’s results were generally positive, the company’s commentary on product ramp and its initial model framework for 2025 generated some reservations. He emphasized the need for demonstrable success in key product initiatives to justify a more bullish stance on the stock.
As of the time of publication on Wednesday, PayPal’s stock had dropped by 1.53% to $79.05. The company’s ongoing efforts to navigate market dynamics and evolve its business model will likely continue to shape investor sentiment in the coming months.
