Raymond James has left its Market Perform recommendation on PayPal (NASDAQ: PYPL) unchanged after the payments company reported fourth-quarter results that fell short of consensus on several fronts. The research team called out an adjusted EPS shortfall of roughly 5% versus expectations and a 1% downside in transaction margin dollars relative to Street estimates.
Third-party InvestingPro data cited in the firm’s review shows PayPal retains a Piotroski Score of 9, reflecting robust financial health across the score’s component metrics despite the operational disappointments.
On the revenue side, Raymond James observed that PayPal’s Branded Total Payment Volume - or Branded TPV - slowed materially. Growth decelerated by 400 basis points to 1%, a pace beneath Raymond James’ own recently lowered estimate of 2%. Management’s forward-looking commentary points to 2026 Branded TPV growth that is expected to be slightly positive to low single digits, implying a continued divergence between PayPal’s branded commerce growth and broader e-commerce expansion.
The firm also highlighted margin dynamics. PayPal signaled that transaction margin dollars are likely to edge down modestly over the year, in contrast with the consensus view that had forecast 4% growth. When combined with the company’s adjusted EPS guidance - characterized as a low single-digit decline to slightly positive year-over-year - Raymond James noted that consensus EPS estimates would need to be trimmed by about 9% at the midpoint to align with management’s range. InvestingPro data cited in the analysis shows 11 analysts have recently reduced their earnings forecasts for PayPal in the upcoming period.
Looking into the first-quarter outlook, Raymond James said PayPal’s guidance for transaction margin dollars and adjusted EPS came in roughly 4% and 8% below consensus, respectively. The firm indicated this shortfall will prompt sharply lower analyst estimates and exacerbate worries about potential market share erosion.
Even with these near-term challenges, Raymond James kept its Market Perform rating. The firm noted that PayPal’s shares were trading at about 7 times its 2027 EPS projection following a roughly 19% decline in the stock price, and concluded the stock’s risk/reward appeared balanced at that valuation.
Supplementary InvestingPro metrics included alongside Raymond James’ note paint a mixed picture of valuation and cash generation. The data show PayPal trading at a P/E of 8.51 and a PEG ratio of 0.54, with the stock close to its 52-week low and an RSI consistent with oversold conditions. Operationally, PayPal’s gross profit margin was reported at 41.56%, and the company produced $5.57 billion in levered free cash flow over the last twelve months.
PayPal’s reported operating results for fiscal fourth quarter 2025 added to the weak tone. The company recorded adjusted earnings per share of $1.23, below the Wall Street consensus of $1.29, and generated revenue of $8.68 billion versus expected revenue of $8.79 billion. Management’s fiscal 2026 guidance was described as materially under consensus estimates, reinforcing concerns about the company’s near-term growth trajectory and competitive positioning.
The quarter’s disclosure also included an executive transition. CEO Alex Chriss, who had been in the role for about 2.5 years, is set to depart, and Enrique Lores from HP will assume the chief executive position on March 1. The leadership change was among the developments cited as contributing to downward pressure on the shares.
Market participants have already reflected the weaker outlook in price targets and recommendations from other brokerages. Evercore ISI reduced its price target for PayPal to $40.00 from $65.00, citing decelerating Branded Online growth, while Truist Securities maintained a Sell rating with a $58.00 price target. Raymond James’ decision to remain Market Perform comes against this backdrop of lowered forecasts and mixed valuation signals.
Contextual note: The company’s combination of a notable EPS miss, soft transaction margin expectations and a downbeat 2026 guide has led multiple analysts to cut forecasts. At the same time, the firm’s strong Piotroski Score and recent free cash flow generation remain points of financial resilience cited by data providers.