Exane BNP Paribas cut PayPal (NASDAQ:PYPL) to Neutral from Outperform, lowering its price target on the stock to $58 per share in a note Friday.
PayPal reported earnings earlier this week, and Exane said management's commentary points to lower transaction margin (essentially gross profit) for the rest of the year than it initially anticipated.
In addition, the firm stated that tiered pricing might also weigh on Braintree's take rate the way it does on that of Adyen.
"Platform transition should last a few quarters, but the other elements weighing on volume conversion into transaction margin - mix within Checkout, mix Checkout/Unbranded, and tiered-pricing at Braintree possibly - might be more structural," the analysts added.
"Past its current cost savings effort, we now expect c12% normative EPS growth, which we model from 2025," said Exane BNP. "We continue to value PYPL on 1.1x PEG that we now apply to 2025 and discount back, leading to our new $58 TP, down c40%. We also worry about greater execution risk in the current context of cost-cutting, upcoming management change, and low visibility on the new strategy."