Canaccord Genuity announced a downgrade of PayPal (NASDAQ:PYPL), lowering its recommendation from Buy to Hold and trimming its price target sharply to $42.00 from $100.00. The move comes with PayPal shares trading at approximately $41.70, just above a 52-week low of $41.43 - a span that reflects a roughly 46% decline in the stock over the last year.
The research house said its outlook for the payments company has changed even as it acknowledged underlying strengths that supported the previous Buy rating. Canaccord highlighted PayPal's strong cash flow profile and what it described as an attractive valuation. Data cited in that context show a free cash flow yield around 15% and a price-to-earnings ratio near 9.7, metrics suggesting the company generates substantial cash relative to its market value.
Analysts at Canaccord also reiterated PayPal's established positioning within the expanding eCommerce payments landscape, noting the company's development over the past 10-11 years since it separated from eBay. The firm pointed to PayPal's historical role in delivering payment experiences that improved purchase conversion and provided transaction security that appealed to both newer merchants and consumers.
At the same time, Canaccord observed that while PayPal is often a facilitative tool for completing online transactions, it was not always strictly necessary to finalize purchases - an observation the firm said influenced its revised view.
Broker reactions following PayPal's fourth-quarter 2025 report
PayPal's fourth-quarter 2025 results included a notable slowdown in branded checkout growth, which expanded by just 1% year-over-year. That deceleration contributed to a series of revisions across other brokerages and research teams.
- Citizens downgraded PayPal from Market Outperform to Market Perform, citing expectations of declining transaction margin dollars in the first quarter and throughout 2026.
- Compass Point moved the stock from Sell to Neutral while lowering its price target to $51.00 from $55.00, saying the CEO transition appears to be reflected in the current share price.
- TD Cowen reduced its price target to $48.00 from $65.00 and maintained a Hold rating, pointing to fourth-quarter exit rate surprises and anticipated headwinds in 2026.
- William Blair reiterated a Market Perform rating, noting the abrupt downgrade to PayPal's financial outlook and the CEO change as indicators of wider challenges in the company and possibly the sector.
- Needham kept a Hold rating after PayPal's fourth-quarter performance missed expectations and guidance for 2026 came in below consensus estimates.
Taken together, these shifts underscore a period of transition for PayPal, with multiple brokerages recalibrating their expectations in response to slowing checkout momentum, leadership change, and revised financial guidance.
Implications
Canaccord's downgrade and the cluster of rating and target adjustments from other firms reflect both recognition of PayPal's cash generation and valuation metrics and concern about near-term growth and profitability trends. For investors and market participants, the combination of a lower price target and a series of broker downgrades signals heightened uncertainty around PayPal's trajectory into 2026.