BofA cuts PayPal price target to $93, maintains Buy rating

Monday, BofA Securities updated its stance on PayPal Holdings Inc (NASDAQ:PYPL), adjusting the price target to $93 from the previous $103, while sustaining a Buy rating on the stock. Currently trading at $62.59, PayPal has seen a 26.7% decline year-to-date, though InvestingPro analysis suggests the stock is undervalued. The adjustment reflects a more cautious outlook due to macroeconomic challenges, although the firm’s long-term view remains positive.

Analyst Jason Kupferberg at BofA Securities noted that PayPal’s upcoming earnings report on April 29 will be closely monitored for signs of progress on strategic initiatives. With an overall Financial Health score of "GOOD" from InvestingPro and revenue growth of 6.8% in the last twelve months, these initiatives aim to accelerate the growth of branded Total (EPA:TTEF) Payment Volume (TPV), which is considered crucial for improving the current weak investor sentiment. However, Kupferberg anticipates that the first quarter may not showcase this turnaround, especially given the broader macroeconomic turmoil.

Despite these challenges, the analyst believes that PayPal’s first-quarter consensus Profit & Loss (P&L) estimates are within reach. However, he also expects that the growth in branded TPV for the quarter might align with the lower end of the company’s guidance range for mid-single-digit (MSD) growth.

Kupferberg reiterated his Buy rating based on several factors, including the strength of PayPal’s brand, a solid balance sheet, potential improvements in button trends, and an attractive valuation with a projected Price to Earnings (P/E) ratio of 12.5x for 2025 and 11.2x for 2026.

The reduction in the price target is attributed to a more conservative P/E multiple of 16x for 2026, scaled down from 18x, due to heightened macro risks. This new price objective reflects the firm’s recalibrated expectations in light of the current economic environment while still expressing confidence in PayPal’s fundamentals and market position.

In other recent news, PayPal Holdings Inc. has announced several key developments. The company reported that Baird analyst Colin Sebastian has lowered the price target for PayPal to $78 from $95, maintaining an Outperform rating. This adjustment considers potential credit risks and exposure to discretionary and cross-border purchases, affecting PayPal’s financial performance. Susquehanna also revised its price target for PayPal, reducing it from $101 to $94, although the analysts maintained a Positive rating. They highlighted macroeconomic volatility as a factor influencing this decision, despite PayPal’s strategic initiatives. Evercore ISI has initiated coverage on PayPal with an In Line rating and set a price target of $65, citing challenges in execution and macroeconomic pressures. Additionally, PayPal announced the upcoming retirement of Rodney C. Adkins from its Board of Directors in June. In a move to expand its cryptocurrency offerings, PayPal has added Chainlink and Solana to its digital wallet services, allowing customers to buy, hold, sell, and transfer these cryptocurrencies. These updates reflect PayPal’s ongoing strategic adjustments and efforts to adapt to current economic conditions and market demands.

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