Truist Securities cuts PayPal stock rating to sell, sets $68 target

On Monday, Truist Securities initiated coverage on PayPal Holdings Inc . (NASDAQ: NASDAQ:PYPL) with a Sell rating, setting a price target of $68. The analysts expressed concerns about PayPal’s growth prospects due to competitive pressures and economic factors. According to InvestingPro data, PayPal maintains its position as a prominent player in Financial Services, with a P/E ratio of 15.79x and revenue growth of 4.79% over the last twelve months.

The analysts noted that while they support many of the strategic initiatives being implemented by PayPal’s new management, such as improving the branded checkout user experience and the Fastlane rollout, they expect the company’s gross profit growth to lag behind market expectations. They project a compound annual growth rate (CAGR) of 2% from 2024 to 2027, compared to the consensus estimate of 5%. InvestingPro analysis shows the company maintains a strong financial health score, though it’s currently trading at a high P/E ratio relative to its near-term earnings growth potential.

The report highlighted competitive challenges in PayPal’s branded checkout business, particularly from Apple (NASDAQ:AAPL) Pay and Shop Pay. Additionally, the analysts foresee a decline in float income as interest rates decrease, which could impact PayPal’s financial performance.

Concerns were also raised about PayPal’s increased focus on its lending business amid current economic conditions. The company’s on-balance-sheet loans were up 31% year-over-year in the first quarter of 2025, which the analysts believe could pose risks in 2026.

Overall, Truist Securities suggested that there may be better investment opportunities in other large-cap stocks under their coverage, such as Fidelity National Information Services (NASDAQ:III) (FI), Mastercard (NYSE:MA), and Visa (NYSE:V). For a deeper understanding of PayPal’s valuation and growth prospects, InvestingPro subscribers can access comprehensive research reports with detailed financial analysis and fair value estimates, along with 7 additional exclusive ProTips for informed investment decisions.

In other recent news, PayPal Holdings Inc. reported its first-quarter 2025 financial results, exceeding earnings per share (EPS) expectations but slightly missing revenue forecasts. The company posted an EPS of $1.33, surpassing the anticipated $1.16, marking a 23% year-over-year increase. Revenue totaled $7.8 billion, just below the projected $7.84 billion. Despite the revenue shortfall, PayPal’s transaction margin dollars saw a notable increase, contributing to the overall positive sentiment among investors.

In a separate development, PayPal announced a partnership with Perplexity, an AI-powered answer engine, to enhance the shopping experience on Perplexity Pro. This collaboration will allow users to make purchases directly through Perplexity’s chat interface using PayPal or Venmo. The integration aims to leverage PayPal’s advanced security measures to ensure safe transactions.

Analyst firms have weighed in on PayPal’s performance, with KeyBanc Capital Markets maintaining a Sector Weight rating, citing solid transaction margins and EPS growth. Meanwhile, JPMorgan maintained an Overweight rating with a $90 price target, noting PayPal’s strong first-quarter results and positive guidance for the remainder of 2025. These developments reflect PayPal’s ongoing strategic initiatives and its efforts to expand its commerce platform capabilities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.