Analyst Commentary Highlights Mixed Outlook and Modest Valuation Changes for PayPal Holdings

Analysts have trimmed their blended fair value estimate for PayPal Holdings to about $76.75 from roughly $82.00, reflecting slightly lower modeled revenue growth, profit margins, and future P/E assumptions, even as several firms recently raised price targets on the back of steady operating progress and new partnerships.

Analyst Commentary

Recent research on PayPal shows a split between analysts who see the Q3 update and product shifts as a reason to lean more constructive, and those who remain cautious on execution, competitive pressure, and margin risk. Here is how the key arguments line up.

Bullish Takeaways

• Bullish analysts raising targets into the US$80 to US$100 range point to what they view as steady operational progress under CEO Alex Chriss, with the business refocus now entering its third year and feeding into their cash flow and earnings assumptions.
• Several firms highlight Q3 as a solid operational quarter, citing improvements in unbranded PSP profitability, Buy Now, Pay Later volume growth, and better Venmo contribution, which they see as support for execution on growth initiatives.
• The partnership to integrate PayPal into ChatGPT and support OpenAI Instant Checkout is viewed by some as a concrete distribution channel that could expand merchant reach, which they factor into higher long term revenue potential and justify higher price targets.
• Some bullish analysts argue that earlier investor expectations around Q3 were set toward the lower end of guidance, so the beat and guidance update reset sentiment higher and help underpin their more constructive stance on the shares.

Bearish Takeaways

• Neutral and cautious analysts emphasize that PayPal branded growth is still the key metric to watch and say it has not yet shown the improvement they would like to see, which limits how far they are willing to move valuation multiples.
• Comments around a slower consumer in September and October, with smaller basket sizes, are flagged as a risk to near term growth and margin leverage, tempering enthusiasm even among some of the more optimistic research houses.
• Some firms keep Neutral or Equal Weight ratings despite higher targets, arguing that the Payments sector has been difficult for stock pickers and that PayPal is still working through execution questions and competitive wallet offerings.
• Goldman Sachs takes a more bearish stance with a Sell rating and a US$70 target, citing expected transaction margin headwinds in 2026, including interest rate effects, the lapping of credit product reacceleration, and softer trends in certain markets that, in their view, cloud visibility on a branded checkout recovery.

What’s in the News

• PayPal signed an agreement with OpenAI that will embed PayPal as the first payments wallet in ChatGPT, allowing buyers and sellers to complete transactions within the AI tool and access PayPal buyer protections such as package tracking and dispute resolution starting next year (CNBC).
• PayPal launched agentic commerce services, a suite of AI-focused products that includes an agentic payments solution called agent ready and a store sync capability to make merchants’ product data discoverable and purchasable across multiple AI shopping channels through a single integration.
• Wix.com and PayPal announced a collaboration that will let Wix merchants sync their catalogs into PayPal’s agentic commerce services, with planned discoverability on Perplexity before the end of 2025 and an agentic payments solution anticipated in early 2026.
• Logicbroker, BigCommerce and Feedonomics expanded partnerships with PayPal to connect merchants’ catalogs and checkout to AI-driven shopping environments such as Perplexity, aiming to keep merchants as the merchant of record while using PayPal for payments, fraud detection and buyer protection.
• PayPal agreed to an up to €6b replenishing loan commitment with KKR for the purchase of up to €65b of European Buy Now, Pay Later loan receivables, extending a prior receivables purchase arrangement while PayPal continues to handle underwriting and servicing.

Valuation Changes

• Fair Value Estimate: The blended fair value moved from about US$82.00 to roughly US$76.75, reflecting slightly lower modeled assumptions.
• Discount Rate: The discount rate used in the model edged higher from about 7.73% to roughly 7.79%, which generally puts modest downward pressure on valuation.
• Revenue Growth: Long term revenue growth assumptions were trimmed from around 7.50% to about 6.95%, implying a more conservative top line trajectory in the model.
• Net Profit Margin: Modeled net profit margin eased from roughly 14.55% to about 14.27%, indicating a slightly less optimistic view on long run profitability.
• Future P/E: The future P/E multiple applied in the valuation moved from about 13.65x to roughly 13.26x, a small reset that also contributes to the lower fair value outcome.