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Investing.com -- Wolfe Research downgraded PayPal to Peer Perform, saying the payments company has made progress streamlining operations and improving Venmo and Braintree, but has yet to prove it can grow more in its core branded checkout business.
The brokerage said investors remain focused on PayPal’s ability to accelerate branded payment volumes, a key driver of market share and long-term profit, and may “require further proof of branded execution before getting more constructive.”
PayPal expects branded volumes to rise about 5% in the third quarter, helped by easing tariff impacts.
But Wolfe flagged weakness in consumer spending in September and ongoing pressure in Germany, where retail sales have slowed.
It sees a fourth-quarter pickup as unlikely given tough U.S. comparisons and a slower-than-hoped rollout of PayPal’s “modern checkout” experience, which has yet to meaningfully lift growth.
Competition in buy-now-pay-later and the need for heavier engagement to drive Pay with Venmo adoption also add pressure.
Management is targeting 8-10% branded growth by 2027, but Wolfe called that a “show-me story”, saying credibility will depend on PayPal consistently delivering at least 7% growth.
Shares are down 19% this year, trailing both the S&P 500 and peers. Wolfe cut its fair value range to $70-$80 from $85, based on 11 times estimated 2027 earnings, and said the stock may trade sideways until PayPal proves its core engine can re-accelerate.
Potential upside could come from faster-than-expected branded gains, higher capital returns or new products such as agentic commerce or stablecoins, the broker said, but those catalysts require patience.