PayPal Holdings (PYPL) received a third analyst downgrade this month, with Morgan Stanley on Tuesday lowering its rating recommendation on the payments giant to Underweight from Equal-Weight.
Analyst James Faucette’s concerns center on the view that improvements to PayPal’s (PYPL) branded checkout integrations have been slow and “are proving to be more complex and time-consuming than expected, and still aren’t moving the needle on usage as we hoped they would,” he wrote in a note.
Agreeing with his assessment, Bank of America Securities also cut PYPL over a delay in reinvigorating branded checkout growth. J.P. Morgan, too, downgraded PYPL early this month.
Additional challenges PayPal (PYPL) is facing into 2026 includes slow progress in monetizing the young Venmo user base, as well as the potential for agentic commerce to grow into a big narrative risk to PayPal, Faucette wrote.
In all, “we see increased risk of downward Adj. EPSrevisions on slower growth and as we expect PayPal will need to continue investing to address the above challenges and spend on marketing to slow share loss,” the note said.
PYPL shares edged down 0.8% in premarket trading.
PayPal (PYPL) Chief Financial & Operating Officer Jamie Miller noted in a recent UBS event that the company’s shift in operating expense management to fund growth has “been very disciplined. And we continue to perform with high free cash flow.”
Morgan Stanley’s Underweight rate compares with the average Wall Street analyst rating and the SA Quant system rating, both at Hold, and the average SA analyst rating of Buy.