Mizuho maintains PayPal stock Outperform rating, $96 target

On Tuesday, Mizuho (NYSE:MFG) Securities reiterated its positive stance on PayPal Holdings Inc (NASDAQ:PYPL), maintaining an Outperform rating and a price target of $96.00. The company, currently valued at $64.55 billion, trades at a P/E ratio of 16.18x. According to InvestingPro analysis, PayPal’s stock appears undervalued based on its comprehensive Fair Value model. The firm’s analyst highlighted the advantageous transaction margins (TM%) of Pay with Venmo compared to PayPal’s traditional checkout button. This is attributed to a funding mix that heavily favors stored balances. The analyst expects that an increase in Pay with Venmo’s Total (EPA:TTEF) Payment Volume (TPV), which is projected to grow at a compound annual growth rate (CAGR) of over 40% in the medium term, could significantly boost PayPal’s overall transaction margin dollar growth due to the service’s higher net take rate, which is more than 1.5 times greater. Recent data from InvestingPro shows PayPal maintaining healthy revenue growth of 6.81% and a robust gross profit margin of 40.54%.

The valuation of PayPal by Mizuho is set at 17 times the estimated earnings per share (EPS) for 2026, which is slightly above the median two-year forward price-to-earnings (P/E) multiple of the legacy payments group. Despite this premium, it is still less than the historical average, where PayPal traded at a seven-point premium compared to its peers. Mizuho’s assessment is based on PayPal’s consistent mid-single-digit percentage transaction margin dollar growth and the promising early trends in new initiatives such as the improved user experience (UX) and Fastlane.

PayPal’s focus on enhancing its services and the potential for Pay with Venmo to contribute to its growth are key factors in Mizuho’s analysis. The firm believes that PayPal deserves the modest premium in its valuation, considering the steady growth in transaction margins and the opportunities arising from new initiatives. The price target of $96 reflects these expectations and the company’s strategic positioning in the digital payments space. InvestingPro subscribers can access 8 additional key insights about PayPal, including detailed financial health scores and comprehensive valuation analysis in the exclusive Pro Research Report, which transforms complex Wall Street data into actionable intelligence.

In other recent news, PayPal Holdings Inc. has announced the appointment of Joy Chik to its Board of Directors. Chik, currently serving as President of Identity and Network Access at Microsoft (NASDAQ:MSFT), brings over two decades of experience in scaling global products and services. This strategic addition aligns with PayPal’s focus on integrating artificial intelligence into its offerings to enhance innovation and customer experiences. Meanwhile, Bernstein has maintained a Market Perform rating on PayPal, reducing its price target from $94 to $80, citing the company’s potential to either become a highly profitable investment or face structural challenges. Wolfe Research also adjusted its price target for PayPal from $90 to $85, maintaining an Outperform rating while expressing concerns over macroeconomic conditions affecting consumer behavior.

Additionally, PayPal’s recent investor presentation outlined ambitious growth targets for 2027, emphasizing its strong brand presence and efforts to address past management execution issues. The company aims to boost branded Total Payment Volume growth, with international expansion playing a key role. As part of the evolving payments landscape, the opening of Apple (NASDAQ:AAPL)’s NFC chip to third-party apps presents opportunities for PayPal to expand its reach in mobile payments. This development could enable PayPal to offer tap-to-pay functionality, potentially enhancing its position in the competitive market.

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