Wolfe Research downgraded shares of PayPal Holdings (NASDAQ:PYPL) to Peer Perform from Outperform, citing concerns that momentum in the company’s branded checkout business may take longer to materialize than investors expect.
Shares slipped -0.9% premarket.
Analyst Darrin Peller said that while management has made progress on initiatives such as modern checkout, Venmo integration and capital discipline, questions remain about PayPal’s ability to deliver consistent branded growth of around 7%. Wolfe highlighted that PayPal is guiding for 5% branded growth in the third quarter, with headwinds from softer consumer spending in key regions and pressure in Germany, its largest European market.
“Shares may remain rangebound until PYPL demonstrates its ability to consistently deliver branded growth, even as we acknowledge relatively sound EPS growth,” Peller wrote. He trimmed his year-end 2026 fair value estimate to a range of $70-$80, from a prior price target of $85.
The analysts said PayPal’s medium-term target of 8% to 10% branded growth by 2027 remains a “show-me story,” noting that penetration of modern checkout has yet to meaningfully move the needle. Growth in “Pay with Venmo” and buy now, pay later services will also require significant expansion to hit targets, amid rising competition.
Still, Wolfe pointed to potential upside catalysts including faster-than-expected branded acceleration, improved capital returns such as a dividend, and new initiatives in agentic commerce and stablecoins.