Shares of PayPal Holdings (PYPL) were down over 9% on Tuesday after two major Wall Street firms reiterated Sell ratings on the stock, even as the company delivered better-than-expected first-quarter results. Analysts at Truist Securities and Goldman Sachs said the earnings beat did little to change their cautious outlook, pointing to soft guidance and ongoing strategic uncertainty under the fintech company’s new leadership.
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PayPal reported adjusted EPS of $1.34, topping consensus estimates of $1.27. Also, revenue of $8.35 billion surpassed analysts’ estimates of $8.05 billion. Branded Checkout, a key area of investor focus, grew 2% year-over-year, improving from the prior quarter’s sluggish performance.
Truist Remains Cautious as PayPal Guides to Sharper Decline in Margin
Despite positive performance, Truist analyst Matthew Coad reiterated a Sell rating and $45 price target. He pointed to the company’s weaker-than-expected Q2 outlook. PayPal guided to an “approximately 3% decline” in transaction margin dollars, compared with Wall Street’s expectation for a 1% drop.
Coad said investors will be watching closely for updates from new CEO Enrique Lores, especially on Branded Checkout momentum, plans to cut operating expenses, and whether PayPal will need to keep funding investments with transaction margin dollars in 2027.
Goldman Sees “Uncontroversial” Numbers but Awaits Strategic Clarity
Similarly, Goldman Sachs analyst Will Nance echoed that cautious tone, reaffirming a Sell rating and $41 price target. Nance said the quarter’s upside was driven largely by credit-related performance in PayPal’s Other Value-Added Services (OVAS) business, while Venmo remained solid. Branded Checkout’s 2% growth was “largely expected,” he added.
Nance said PayPal’s plan to split the business into Checkout, Venmo, and Processing/Crypto could be positive over time, but investors still want a clearer strategy. He also noted the company announced a $1.5 billion cost-savings plan, though management has not said how much of those savings will be reinvested.
“Overall, the numbers appear relatively uncontroversial,” Nance wrote, adding that the market’s focus now shifts to the strategic message Lores will deliver on the earnings call.
Is PayPal a Buy, Sell, or Hold?
Turning to Wall Street, PYPL stock has a Hold consensus rating based on two Buys, 14 Holds, and two Sells assigned in the last three months. At $48.93, the average PayPal stock price target implies a 6.46% upside potential.
