Last Update 19 Feb 26
Fair value Decreased 29%PYPL: AI Commerce Partnerships And Share Buybacks Will Support Future Upside
The Analyst Price Target for PayPal Holdings has been reset lower from $73.33 to $51.88, reflecting analysts' updated views on softer revenue growth, slightly weaker profit margins, and a more conservative future P/E following a wave of price target cuts and rating changes across the Street.
Analyst Commentary
Recent research on PayPal Holdings reflects a mixed but more cautious tone, with many firms cutting price targets and adjusting ratings, while a smaller group highlights reasons to stay constructive on the story.
Bullish Takeaways
- Bullish analysts point to the company’s ability to support earnings growth into the medium term, which they see as a cushion for valuation even as sentiment weakens.
- Some see the current share price as already discounting concerns around market share and branded checkout trends, which could limit further downside if execution stabilizes.
- Commentary around deals such as the Cymbio agreement is framed as a step forward on product and partner execution. If carried through, this could support more durable growth in total payment volume over time.
- A few firms maintain constructive or Positive ratings alongside trimmed price targets. They indicate that they still view PayPal as a core player in digital payments despite near term headwinds.
Bearish Takeaways
- Bearish analysts are focused on competitive pressure in branded checkout and broader payments, which they link to concerns about PayPal’s market share and the pace of total payment volume growth.
- Multiple firms lowered price targets by double digit dollar amounts, citing softer revenue expectations and a view that the stock’s P/E may need to stay more conservative until growth trends improve.
- Several rating downgrades, including moves to Neutral, reflect a view that execution risk around reaccelerating branded experiences is high. This could cap valuation even if earnings remain solid.
- Some bears argue that sentiment is weak across the payments group and that upcoming quarterly reports may not act as strong catalysts, leaving limited room for a quick re rating in the absence of clearer growth signals.
What’s in the News
- Board appoints Enrique Lores as CEO effective March 1, 2026, with Jamie Miller serving as interim CEO, as the company looks for faster execution relative to competition and industry peers (Key Developments).
- Company reports completion of two share repurchase programs, buying a combined 22.84% of shares for approximately US$15.2b between August 2022 and December 2025 (Key Developments).
- PayPal teams up with Microsoft to power Copilot Checkout in Copilot, bringing PayPal branded checkout, guest checkout, and credit card payments directly into AI driven shopping flows (Key Developments).
- Multiple partnerships extend PayPal and Venmo into new use cases, including text based payments with Authvia, automotive service payments with UpdatePromise, tax filing with april, digital gift cards with Blackhawk Network, payroll access with Paychex, and AI commerce integrations with Logicbroker, Ashley, and Newegg (Key Developments).
- Advancements in AI tools are affecting software and data stocks broadly, which includes PayPal as part of the wider software and payments group (Periodicals).
Valuation Changes
- Fair Value: Reset lower from $73.33 to $51.88, a reduction of roughly 29% in the modeled intrinsic value.
- Discount Rate: Adjusted slightly higher from 7.79% to 7.83%, implying a modestly higher required return for the equity.
- Revenue Growth: Assumed long term growth rate reduced from 6.55% to 4.21%, indicating a more conservative outlook for top line expansion in the model.
- Net Profit Margin: Trimmed from 14.10% to 12.67%, reflecting lower expected profitability on each $ of revenue in the updated assumptions.
- Future P/E: Target forward P/E multiple moved down from 13.0x to 10.7x, signaling a lower valuation multiple being applied to projected earnings.
Key Takeaways
- PayPal's transformation into a commerce platform and smart wallet introduction could enhance revenue and improve merchant relationships.
- Expanded branded experiences, BNPL rollout, and value-added services are driving transaction volume, margin, and earnings growth.
- Macroeconomic uncertainty, competition, and regulatory changes could hinder PayPal's revenue growth and cross-border transactions amidst challenges in key markets.
Catalysts
About PayPal Holdings- Operates a technology platform that enables digital payments for merchants and consumers worldwide.
- PayPal is transforming from a payments company to a commerce platform, focusing on personalized experiences and leveraging vast data. This strategic shift could drive future revenue growth as it taps into broader commerce opportunities beyond traditional payment processing.
- The introduction of a dynamic smart wallet, enabling consumers to make optimal payment choices, supports PayPal's transition to an end-to-end commerce partner, potentially impacting net margins positively as it deepens relationships with merchants and boosts transaction volumes.
- PayPal's branded experiences and omnichannel initiatives, which include expanding Venmo and PayPal debit card usage, are accelerating TPV growth; these developments are likely to enhance revenue and improve earnings due to increased consumer engagement and frequency of use.
- The rollout of Buy Now, Pay Later (BNPL) and intensified marketing efforts in Europe and key markets may bolster transaction volume and revenue, especially as BNPL users tend to spend more, contributing to mid
- and long-term revenue growth and margin improvement.
- PayPal's focus on value-added services such as optimized debit routing and fraud protection are generating higher transaction margins, which is expected to continue bolstering earnings growth by shifting volume to more profitable avenues while improving service offerings to large and small merchants.
PayPal Holdings Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming PayPal Holdings's revenue will grow by 5.6% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 14.5% today to 14.2% in 3 years time.
- Analysts expect earnings to reach $5.4 billion (and earnings per share of $6.32) by about September 2028, up from $4.7 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $6.1 billion in earnings, and the most bearish expecting $4.8 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.8x on those 2028 earnings, up from 13.8x today. This future PE is lower than the current PE for the US Diversified Financial industry at 16.5x.
- Analysts expect the number of shares outstanding to decline by 4.7% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.83%, as per the Simply Wall St company report.
PayPal Holdings Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The macroeconomic uncertainty, tariffs, and geopolitical issues could impact consumer spending, supply chains, and PayPal's revenue growth.
- The shift away from unprofitable Braintree volume, while positive for transaction margins, may dampen gross revenue growth.
- Regulatory changes, such as tariff exemptions with China, could impact cross-border transaction volumes and negatively affect branded checkout TPV.
- Competition in key markets like the UK may challenge PayPal's ability to gain market share and maintain revenue growth.
- Changes in foreign currency exchange rates could have an unpredictable effect on PayPal's cross-border transaction revenues.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $82.522 for PayPal Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $120.0, and the most bearish reporting a price target of just $62.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $38.1 billion, earnings will come to $5.4 billion, and it would be trading on a PE ratio of 15.8x, assuming you use a discount rate of 7.8%.
- Given the current share price of $67.68, the analyst price target of $82.52 is 18.0% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
Have other thoughts on PayPal Holdings?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Read more narratives
US$72
FV
34.3% undervalued intrinsic discount10.11%
Revenue growth p.a.
308
users have viewed this narrative2users have liked this narrative
0users have commented on this narrative
7users have followed this narrative
NA
Community Contributor
PYPL Market Outlook
PayPal Holdings, Inc. (PYPL) has demonstrated a significant recovery in 2024, with its stock price rising approximately 48% year-to-date, outperforming the S&P 500.
View narrativeUS$116.26
FV
59.3% undervalued intrinsic discount8.51%
Revenue growth p.a.
72
users have viewed this narrative3users have liked this narrative
0users have commented on this narrative
5users have followed this narrative
US$75.5
FV
37.3% undervalued intrinsic discount18.00%
Revenue growth p.a.
997
users have viewed this narrative53users have liked this narrative
14users have commented on this narrative
14users have followed this narrative
US$111.57
FV
57.6% undervalued intrinsic discount5.00%
Revenue growth p.a.
1k
users have viewed this narrative104users have liked this narrative
6users have commented on this narrative
30users have followed this narrative