Bernstein SocGen Group has reaffirmed a Market Perform rating on PayPal (NASDAQ:PYPL), keeping a $45.00 price target against a prevailing share price of $41.14. The research note emphasizes material questions around PayPal’s branded payments business and signals that downside in that segment may exceed pressure on total payment volume.
Branded business and e-commerce trends
Bernstein’s analysis draws attention to weak e-commerce growth once large marketplaces such as Amazon, Walmart and Shopify are excluded. The firm said data point to a particularly challenging environment for e-retailers and for PayPal’s branded checkout product specifically. That weakness, the research house warned, could translate into worse-than-expected gross profit trends for the branded business relative to overall payment volume.
The research note also discussed PayPal’s waning pricing power. According to Bernstein, PayPal no longer enjoys the same "bragging rights" relative to competing payment methods when it comes to conversion rates and comparable metrics. The implication is that competitive intensity is compressing PayPal’s ability to command higher take rates or premium positioning for branded checkout.
Valuation view and structural concerns
Despite those operating worries, Bernstein acknowledged that the market price may already reflect some of the structural negatives. The firm pointed to a 16% 2026 free cash flow yield as an indicator that the current valuation embeds a degree of the "structural short" thesis. Bernstein suggested that, at present levels, the upside appears limited but that activist interest or a sum-of-the-parts valuation could be plausible outcomes.
The note said a share price in the $30-35 range would make a sum-of-the-parts exercise - explicitly considering potential spin-offs such as Braintree and Venmo - increasingly attractive from a valuation standpoint.
Peer reactions and recent developments
PayPal has seen a wave of revised estimates and ratings after an earnings miss and a downward revision to guidance. Wells Fargo lowered its price target to $48.00 while keeping an Equal Weight rating. HSBC downgraded PayPal from Buy to Hold and cut its target to $47.00, citing e-commerce share losses and declining branded checkout volumes. Canaccord Genuity moved PayPal to Hold from Buy and reduced its target to $42.00, even as it acknowledged strong cash flow and an attractive valuation. RBC Capital trimmed its target sharply to $59.00 from $91.00 but maintained an Outperform rating, a change prompted in part by an abrupt CEO transition that signaled slower progress in branded checkout total payment volume growth. Jefferies reiterated a Hold rating with a $40.00 target and noted a decline in branded take rates in Q4.
Collectively, these revisions underline investor concern about PayPal’s ability to defend or expand branded checkout volumes amid leadership disruption and execution challenges.
What this means for markets
The debate centers on whether PayPal’s current market capitalization already discounts the structural headwinds the firm faces or whether further deterioration in branded checkout metrics and pricing power will depress profits and free cash flow beyond current expectations. Bernstein’s assessment leaves open the possibility of corporate actions should shares move materially lower, while other brokerages’ actions reflect varying views on execution risk and cash flow resilience.
Note: Article reflects analysis and reported broker actions; it does not speculate beyond the information provided by the research notes cited.