PayPal stock rating maintained by KeyBanc despite tariff concerns

Investing.com - KeyBanc Capital Markets has maintained its Sector Weight rating on PayPal (NASDAQ:PYPL), a $68.9 billion market cap financial services giant, following the company’s second-quarter earnings report. According to InvestingPro analysis, PayPal appears undervalued despite concerns about tariff impacts affecting recent results.

PayPal exceeded expectations on headline revenue, transaction profit, and non-GAAP earnings per share in the quarter, with trailing twelve-month revenue reaching $31.9 billion. The company raised its full-year 2025 guidance, supported by a robust financial health score rated as "GOOD" by InvestingPro. However, KeyBanc analyst Alex Markgraff noted disappointments in transaction margin and a deceleration in Branded online total payment volume growth, which was partially affected by tariffs.

The financial services firm pointed out that PayPal’s transaction profit included a one-time item that provided a 150 basis point tailwind to growth, making the upside "much skinnier" when adjusted. Higher transaction losses counteracted this effect, while some marketing-related operating expenses shifted from the second quarter to the third quarter of 2025.

KeyBanc acknowledged positive developments in PayPal’s business, including updates on Venmo, Braintree’s growth and profitability, and product innovation. Trading at a P/E ratio of 16.8x, PayPal maintains strong profitability metrics, as highlighted in the comprehensive Pro Research Report available on InvestingPro. Despite these positives, the firm indicated that the quarterly results weren’t sufficient to "alleviate any particular debate in the stock."

The analyst described PayPal’s guidance as prudent with "some downside cushion at the low end," noting this approach seemed "a bit more reasonable given tariff impact acknowledgment." KeyBanc has revised its financial projections upward based on the second-quarter results and updated guidance.

In other recent news, PayPal Holdings Inc . reported its financial results for the second quarter of 2025, exceeding Wall Street expectations in both earnings per share and revenue. Despite this positive performance, PayPal’s stock experienced a decline in pre-market trading. The company has raised its full-year guidance, indicating anticipated growth in transaction margin dollars and non-GAAP earnings per share. In related developments, Citizens JMP has adjusted its price target for PayPal, lowering it to $100 from a previous target of $110. The firm maintained a Market Outperform rating on the stock, noting the competitive pressures PayPal faces from digital wallets and the investments it is making to enhance consumer adoption. These updates reflect recent developments surrounding PayPal.

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