Habib Ur Rehman
2 min read
In This Article:
Truist Securities kicked off its coverage of PayPal (NASDAQ: PYPL) with a bearish stance in Early June, issuing a Sell rating and a $68 price target.
The Firm's analyst points to trouble ahead. PayPal is still a big name, but competition is eating into its core checkout business. Apple Pay and Shop Pay are crowding the space. Meanwhile, broader economic pressure isn’t helping.
The analyst doesn’t dismiss the changes PayPal’s new management is trying, like improving the checkout process and pushing out Fastlane, but they’re not convinced the payoff will be worth it. They’re forecasting just 2% annual profit growth through 2027. That’s less than half of what most analysts expect.
Image by mohamed Hassan from Pixabay
PayPal’s numbers aren’t terrible. Revenue grew 4.8% over the past year, and the company still scores well on financial health. But its current valuation doesn’t match its near-term outlook. The price-to-earnings ratio looks high considering what it’s likely to earn going forward.
The analysts also flagged PayPal’s growing lending business. Loans on the books jumped 31% YoY in Q1 2025. That might look like a growth story now, but Truist thinks it could turn into a liability by 2026.
To wrap it up, they suggest looking elsewhere. Fidelity National (FI), Mastercard (MA), and Visa (V) all got a mention as safer places to park cash. Not everyone agrees with Truist. Previously we published this bullish thesis on PYPL which advocated the opposite view.
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Disclosure: None.
