Concerns over the near-term growth trajectory of PayPal’s most profitable segment are weighing heavily on investor sentiment and analyst outlooks. The digital payments giant faces renewed scrutiny following a significant price target reduction from Evercore ISI.
Analyst Downgrade Highlights Concerns
Market researchers at Evercore ISI have cut their price target for PayPal from $75 to $65 per share. While the firm maintains its “In-line” rating on the stock, this adjustment reflects growing skepticism about the company’s short-term performance. The revision was primarily driven by disappointing signals for the ongoing fourth quarter.
Slowing Momentum in Key Revenue Driver
The core issue centers on PayPal’s “Branded Checkout” business, the classic payment process initiated via the PayPal button. This segment remains the company’s most profitable revenue source. Recently, Chief Financial Officer Jamie Miller cautioned that growth in this area for Q4 2025 is likely to be weaker than in the previous quarter.
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Two main factors are contributing to this deceleration:
* Changing Consumer Habits: Shifts in spending behavior are leading to a decline in average order values.
* Growth Curve Flattening: Although transaction volume grew by a currency-adjusted 8% in the third quarter, a slowdown of one to two percentage points is anticipated for the final quarter.
While other divisions like “Buy Now, Pay Later” (up 20%) and Venmo (up 40%) continue to post double-digit growth, they are currently unable to fully offset the weakness in the high-margin core checkout operation.
Valuation Context and Upcoming Catalyst
PayPal’s stock, which has already lost more than 37% of its value since the start of the year, is now trading at a historically low valuation, with a price-to-earnings ratio of approximately 12. Market observers are already factoring in increased operating expenses for 2026, as the company plans to boost investments in product innovation and AI partnerships. In the immediate term, investor attention is focused on tomorrow, December 10, when the company’s dividend payment is scheduled.
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