On Wednesday, Mizuho (NYSE:MFG) Securities revised its price target for PayPal Holdings Inc . (NASDAQ:PYPL) shares, reducing it from $100 to $96, while maintaining an Outperform rating. According to InvestingPro data, the stock has experienced a significant 12.4% decline over the past week, though analysis suggests the shares are currently trading below their Fair Value. The adjustment came after concerns were raised about PayPal’s competitive edge, as growth in its U.S. Branded Checkout was estimated to be in the low single-digit percentage range for the past quarters. Specifically, growth was approximately 2-3% in the third quarter and around 4-5% in the fourth quarter. This slowdown in growth, along with the increasing prevalence of alternative checkout options like Shop Pay and Apple (NASDAQ:AAPL) Pay, resulted in PayPal’s stock declining by 13% on Tuesday, compared to a 1% increase in the S&P 500 Index.
Despite these concerns, Mizuho remains optimistic about PayPal’s prospects. The company maintains strong fundamentals, with InvestingPro reporting revenue growth of 6.81% and a healthy gross profit margin of 40.5%. The firm highlighted that PayPal’s U.S. business experienced a 300 basis point acceleration, surpassing the 200 basis point acceleration seen by competitors Visa (NYSE:V) and Mastercard (NYSE:MA) in the U.S. Furthermore, Mizuho noted that PayPal’s cautious guidance already accounts for only a minimal contribution from new products and services, which suggests there is potential for upside if these initiatives perform better than expected.
PayPal is in the process of rolling out an upgraded user experience, which is currently available to 25% of U.S. checkout flow. In addition, the company is working on other initiatives such as Fastlane, PayPal Everywhere, and advertising programs. Mizuho believes that PayPal’s analyst day scheduled for February 25, 2025, could serve as a positive catalyst if the company provides encouraging updates on the progress and impact of these new products and services.
The revised price target reflects Mizuho’s updated model in light of the recent developments and the potential for PayPal to outperform expectations with its upcoming initiatives. With an overall financial health score rated as "GOOD" by InvestingPro, which offers comprehensive analysis through its Pro Research Report covering 1,400+ top stocks, investors and analysts alike will be closely watching the outcomes of the analyst day for signs of PayPal’s future trajectory in an increasingly competitive digital payments landscape.
In other recent news, PayPal Holdings Inc. has been the subject of various analyst reports. Citi analyst Ashwin Shirvaikar raised the price target for PayPal from $97 to $98, maintaining a Buy rating. He noted that despite challenges, PayPal’s underlying transaction margin dollar growth and earnings per share trajectory by 2025 are better than previously forecasted. In a separate report, Shirvaikar reiterated a Buy rating with a consistent price target of $97, highlighting the company’s better-than-expected total payment volume and other value-added services.
BTIG analyst Lance Jessurun, however, maintained a Neutral rating on PayPal stock, citing concerns over the company’s growth outlook. Jessurun pointed to the company’s forecasted free cash flow yield of around 7% for fiscal year 2025, which he deemed full given consensus estimates for transaction margin dollars and earnings per share growth.
KeyBanc Capital Markets also maintained a "Sector Weight" rating on PayPal, expressing caution about the company’s 2025 transaction margin dollar growth guidance. Finally, TD Cowen analyst Bryan Bergin raised the price target for PayPal stock to $90 from $78, while maintaining a Hold rating. Bergin noted that PayPal’s fourth-quarter activity had slightly exceeded expectations, suggesting potential upside for the company’s total payment volume growth.
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