Shares of PayPal Holdings (NASDAQ:PYPL) are trading lower Thursday after Morgan Stanley downgraded the stock and lowered its price target.
- PayPal Holdings stock is trading near recent lows. What’s ahead for PYPL stock?
What To Know: Morgan Stanley analyst James Faucette downgraded PayPal from equal-weight to underweight and lowered the price target from $74 to $51.
Faucette said in a new note that PayPal is losing market share to competitors because the company has moved “too slowly” on branded checkouts, which give users the ability to customize their digital register.
The Morgan Stanley analyst also cited the company’s “history of poor tech integrations,” suggesting PayPal won’t be able to capitalize on AI agent partnerships. In September, OpenAI partnered with PayPal competitor Stripe to offer instant checkout within the ChatGPT app.
Faucette also added that PayPal has been slow to monetize the Venmo relationship, and has missed the boat on capturing younger users who tend to be digitally native.
Certain financial metrics have also caught Faucette’s eye. The analyst sees increased risk of a downward adjusted earnings-per-share adjustment as a result of slower growth. He also anticipates higher operating expenses growth and bigger spend on marketing in the near future if PayPal focuses on patching up the weaknesses he highlighted.
PayPal has beat expectations for revenue in three out of the five past quarters and pulled in $8.42 billion most recently. The company has also beat earnings-per-share estimates in six consecutive quarters, according to Benzinga Pro.
PYPL Price Action: PayPal shares were down 0.10%, trading well off the lows of the session at $60.13 at the time of publication, according to Benzinga Pro.
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