PayPal Shares Defy Analyst Downgrade as Valuation Draws Buyers

Despite facing a fresh wave of skepticism from Wall Street, PayPal's stock attracted buyers at the start of the week. This move came in direct contrast to a rating downgrade issued by the research firm Monness, Crespi, Hardt & Co., suggesting investors may believe the current low valuation already accounts for the company's challenges.

PayPal shares advanced to $59.32 on Monday. For value-focused market participants, this level appears compelling after the stock has shed more than 30% over the past year. Trading at a price-to-earnings (P/E) ratio of approximately 11.7, the equity is priced at a historically low multiple.

From a technical perspective, the price action also showed a positive signal by edging above the key 200-day moving average, situated at $59.01. However, caution is warranted as the Relative Strength Index (RSI) reading of 70.5 indicates the possibility of a short-term overbought condition.

Analyst Concerns Highlighted

The recent caution from Monness, Crespi, Hardt & Co. shifted their stance on the payment provider from a "Buy" to a "Neutral" recommendation. Their rationale centered on two core issues: consensus estimates for the 2026 fiscal year have not been sufficiently revised downward, and new growth initiatives—often termed "ramps" by analysts—are expected to take meaningfully longer to contribute to earnings than initially anticipated.

Should investors sell immediately? Or is it worth buying PayPal?

This assessment aligns with growing reservations from other institutions, including Mizuho and Morgan Stanley, which have also pointed to risks surrounding transaction margins and volume growth.

Strategic Shift Faces a Long Road

Concurrently, PayPal's management is executing a strategic pivot aimed at reducing reliance on its traditional checkout business. Key projects in this transformation include the planned "PayPal World" wallet for the African market and an application for an industrial bank charter in Utah to expand small business lending.

As analysts note, these are long-term endeavors with uncertain timelines for delivering material results. The true test for the company's direction will arrive on February 11, 2026, when it reports fourth-quarter results. The market's focus will be squarely on the outlook for the full 2026 fiscal year.

Should management confirm analyst fears of slower growth cycles, the current share price recovery could prove fleeting. Conversely, if PayPal can demonstrate stable margins throughout its strategic overhaul, the recent foundation-building in its stock price may have staying power.