PayPal Holdings (NASDAQ:PYPL) stock experienced a drop in pre-market trading following a second analyst downgrade this week.
BTIG analysts downgraded the payments company from Buy to Neutral, citing "too much uncertainty."
“While PYPL's unbranded TPV growth (primarily Braintree) has been compelling, growing 32% FXN during 3Q23, it carries a much lower transaction margin than PYPL's traditional branded checkout TPV, which grew 6% FXN during 3Q23,” the analysts said.
Shares fell 1.3% in early Friday trade.
Analysts anticipate that the new CEO, Alex Chriss, will prioritize driving margin expansion for Braintree and stabilizing/trivializing traditional branded checkout, both expected to be multiyear catalysts.
“We see the process of returning the company to consistent and profitable revenue growth as a multiyear initiative, rather than a FY24 story,” analysts write in a note.
This downgrade follows a previous rating cut by Oppenheimer earlier in the week, which attributed the decision to profitability pressure on PayPal.
“We want to see more tangible indications that trends are beginning to turn positive before we become more constructive on the stock,” analysts concluded.