Analyst Caution Weighs on PayPal’s Stock Outlook

Shares of PayPal came under renewed selling pressure this Wednesday, extending recent losses. The decline follows a wave of price target reductions from major investment banks, reflecting growing skepticism on Wall Street about the company's ability to sustain its growth trajectory without significantly ramping up investment, with particular focus on margin pressures.

The bearish sentiment was catalyzed by adjustments from three prominent research firms on Tuesday. Analysts at Compass Point reinforced their Sell rating, slashing their target price from $66 to $56. They cited a loss of momentum in PayPal's core "Branded Checkout" business, referencing comments from CFO Jamie Miller that growth in this segment could slow to a currency-adjusted rate of approximately 2% by Q4 2025, a notable deceleration from the 5% growth recorded in the third quarter.

Wells Fargo also reduced its outlook, cutting its target from $74 to $67. Analyst Jason Kupferberg pointed to rising investment needs, subsequently revising his 2026 transaction profit growth forecast down to 3.0% from 4.8%. The firm's earnings-per-share estimate was lowered to $5.63. Meanwhile, Evercore ISI maintained a neutral stance, reaffirming a $65 price target.

This cautious consensus was challenged by a single contrary analysis from Seeking Alpha, which upgraded the stock to a Buy recommendation. The report highlighted what it views as underestimated growth potential within the Venmo platform and the "Buy Now, Pay Later" division.

Should investors sell immediately? Or is it worth buying PayPal?

Solid Results Overshadowed by Forward-Looking Concerns

The prevailing analyst doubt contrasts with the company's most recent quarterly performance. For Q3, PayPal reported earnings per share of $1.34, surpassing the $1.20 consensus estimate. Revenue climbed 7.3% to reach $8.42 billion.

However, the market is focused on the road ahead. The central issue is that PayPal faces the prospect of substantially higher expenditures to effectively compete with rivals like Apple Pay. The downward revisions to transaction profit growth forecasts suggest the period of efficiency gains may be ending, potentially heralding a new cycle of investment that could pressure profitability margins.

Key Levels and Upcoming Catalysts

Looking forward, PayPal has provided Q4 2025 EPS guidance in the range of $1.27 to $1.31. For the full year, the company anticipates earnings per share between $5.35 and $5.39. The next quarterly results are scheduled for release on February 11, 2026.

Market technicians are watching the $60 share price level closely, viewing it as a critical support zone. A sustained break below this point could pave the way for a retest of the 52-week low near $56. Until the company can convincingly address these growth concerns, the stock may struggle to establish a firm footing.