PayPal upgraded at Wolfe Research on upside potential

PayPal Holdings (NASDAQ:PYPL) was rising after Wolfe Research upgraded the payments stock on a potential upside to Street estimates and investors gaining incremental conviction in the medium-term acceleration.

The stock was raised to Outperform from Peer Perform, with a 2025 year-end price target of $107. PYPL was trading +1.81% Friday pre-market at $91.02.

“We see strong 4Q results and a conservative FY25 guide,” said analysts led by Darrin Peller in a research note.

PYPL’s ~220M monthly active user base is among the largest of any digital wallet company outside of China, and the largest in the U.S., the note said.

“PYPL added 1 million new debit cards to its active user base in only the first 6-7 weeks of its PYPL Everywhere campaign that started this past September. We believe that upside from the company’s renewed debit card initiatives across both PYPL and Venmo are underappreciated,” said the note.

“Management looks to maintain its non-txn expense growth at a rate that is less than half of gross profit growth going forward, underscoring the material operating leverage potential,” said Wolfe Research.

The rating aligns with the average sell-side analysts and Seeking Alpha authors rating of Buy. The Quant Rating system grades the stock as Strong Buy.

PayPal is set for further turnaround progress, upside potential to ’25/’26 transaction profit estimates, potential for better “modest improvement” in branded volumes, and favorable investor positioning, said Bank of America Securities in a recent note.

The stock has gained 45.58% year-to-date.

“I think that PYPL still presents a compelling investment opportunity as the stock is still attractively valued and its improving fundamentals are supported by the strong momentum and favorable technical setup,” said SA analyst KM Capital.