Jefferies reaffirmed a Hold rating on PayPal Holdings Inc. and left its price target unchanged at $40.00 in a research note published Tuesday. At the time of the report, PayPal shares were trading at $41.14, slightly above the firm’s target, though market data suggests the stock may be materially undervalued on a Fair Value basis.
The Jefferies team examined PayPal’s 10-K disclosures related to transaction revenue to derive product-level take rates for the fourth quarter. Their calculations point to a modest contraction in branded take rates, which the firm estimates fell by 3.5 basis points year-over-year in Q4 versus roughly flat take-rate performance in Q3. Jefferies attributes this decline to volume-driven investments that tempered branded margins.
Not all payment products moved in the same direction. Braintree saw an improvement in take rates, rising by 3 basis points year-over-year in Q4 after a 2 basis point increase in Q3. Venmo likewise recorded a sequential uptick, with take rates climbing 4 basis points in Q4 compared with a 3 basis point gain in the prior quarter.
Despite those gains at Braintree and Venmo, Jefferies highlighted that overall transaction take rates excluding hedges faced downward pressure in Q4 from several specific factors. The firm cited a mix shift toward lower-yielding total payment volume - TPV - lower pricing for Xoom services, and a revenue reclassification connected to Paidy as contributors to the weaker take-rate profile.
Jefferies’ breakdown of PayPal’s transaction revenue components across its various payment platforms and services underscores both areas of resilience and clear structural challenges within the company’s revenue model. The note stresses that while certain product-level metrics improved, aggregate transaction revenue metrics remain strained by mix and pricing dynamics.
On fundamental measures, PayPal continues to show profitability and moderate top-line expansion. The firm reported a price-to-earnings ratio of 7.58 and revenue growth of 4.32% over the trailing twelve months. Management has also been actively repurchasing shares, according to market research referenced in the note, and supplemental research materials provide further analysis and additional strategic observations.
Recent industry commentary and analyst actions reflect broader investor scrutiny. PayPal experienced a slowdown in branded checkout growth, decelerating to 1% year-over-year in the fourth quarter of 2025, a trend that has prompted multiple analyst downgrades and cuts to price targets.
- HSBC reduced its rating from Buy to Hold and lowered its price target to $47.00, citing concerns about e-commerce share losses.
- Canaccord Genuity downgraded PayPal to Hold from Buy and trimmed its price target to $42.00, while noting the company’s strong cash flow.
- RBC Capital kept an Outperform rating but reduced its price target to $59.00 following a sudden change in the CEO role.
- Wells Fargo cut its price target to $48.00, pointing to execution concerns specific to PayPal.
- Citizens moved PayPal to Market Perform, highlighting slowing checkout growth and forecasting a decline in transaction margin dollars in 2026.
Taken together, these analyst moves and the product-level take-rate analysis from Jefferies paint a picture of a payments business that remains profitable but faces meaningful near-term headwinds. The company’s capacity to stabilize take rates and arrest checkout growth deceleration will be central to how investors and sell-side analysts reassess forecasts and price targets in coming quarters.
Note: This article reports on analyst research and market disclosures and summarizes the data contained in those documents.