The PayPal (NASDAQ:PYPL) selloff is overblown, according to Mizuho analysts, who reiterated a Buy rating and $92 price target on the stock in a note to clients Thursday.
PayPal shares fell over 12% Tuesday post-earnings and a further 3% on Wednesday, falling below the $63 mark. The stock is currently up 1.4% at around $64.29 per share.
"PYPL shares declined sharply post-earnings despite an acceleration in Branded Checkout TPV growth," said the analysts, who added that "the ~6bps Y/Y transaction take-rate decline was a key culprit."
"Management attributed the pressure to mix shift towards the less-profitable Braintree business, which is growing 5x faster than Branded checkout. Since this doesn't explain 100% of the decline, many investors worry about broad-based pricing pressure across PYPL's businesses," they added.
However, the analysts said the firm's deep dive shows that although take rates declined for Branded Checkout in the first quarter, it reflected a mix shift to large enterprise merchants and lower take-rate geographies.
"On a like-for-like basis, pricing was stable for both Branded and Unbranded, making the negative stock reaction overblown, in our view," they concluded.