Rothschild Redburn on Wednesday downgraded PayPal (NASDAQ:PYPL) from Neutral to Sell and sharply reduced its price target from $70.00 to $50.00. At the time of the note, PayPal was trading at $55.51, a level only marginally above its 52-week low of $55.02, and the stock has fallen 28.87% over the last six months.
The research house said its reassessment stems from a view that the competitive landscape in payments is changing as commerce becomes more agentic. In that scenario, Rothschild Redburn expects pricing power to shift away from large merchants and back toward card networks, a dynamic the firm believes could put PayPal at a disadvantage despite the company’s strong financial metrics - including a Piotroski Score of 9 and a price-to-earnings ratio of 11.15.
Two specific drivers were highlighted in the note:
- Pricing power - The firm expects pricing leverage to move toward card networks as e-commerce becomes more fragmented, reducing the influence of large merchants over payment routing and fees.
- Demand for cyber and risk services - Rothschild Redburn anticipates increased demand for cyber and risk offerings from Visa and Mastercard as risks rise in an agentic commerce environment, strengthening the networks’ revenue opportunities beyond transaction fees.
While downgrading PayPal, Rothschild Redburn simultaneously raised its longer-term earnings-per-share outlooks for the two major card networks. The firm boosted its 2028 EPS estimate for Visa by roughly 10% and for Mastercard by about 5%, and it increased its price target for Visa from $327 to $385 - a move the note says implies roughly 18% upside from the then-current level. For Mastercard, the firm adjusted its target from $768 down to $685, which the research note still characterizes as indicating about 30% potential upside.
The research house’s repositioning underscores a divergence in its view of platform-first payment providers and the traditional card networks. Despite PayPal’s favorable fundamental scores, Rothschild Redburn’s market-structure concerns drove the downgrade.
Additional market context in the note and related coverage includes a number of developments and analyst stances that investors are weighing ahead of PayPal’s upcoming results. InvestingPro data referenced in the coverage shows PayPal trading materially below its Fair Value assessment, and the platform offers more than ten ProTips for subscribers in advance of PayPal’s February 3 earnings report.
Several broker comments and corporate moves were also noted in recent coverage:
- PayPal agreed to acquire Cymbio, a multi-channel orchestration platform, with the stated objective of strengthening its AI commerce capabilities and bolstering agentic commerce services so merchants can sell more effectively on AI-driven shopping platforms.
- BTIG reiterated a Neutral rating on PayPal. The firm’s stance follows a share decline since PayPal’s third-quarter earnings, which BTIG said was driven by reduced expectations for 2026 trade margin dollars and adjusted EPS growth.
- Jefferies maintained a Hold rating on PayPal, citing a slowdown in UK e-commerce growth as a headwind.
- Cantor Fitzgerald initiated coverage with a Neutral rating, noting PayPal’s strategic initiatives aimed at balanced, profitable growth.
On the product front, PayPal introduced a benefit for U.S. Debit Mastercard cardholders that provides free tax filing through a partnership with the tax technology platform april, a service the company says can help users save on filing costs and complete returns quickly.
Investors and market participants facing the upcoming PayPal earnings release will be balancing those developments - the downgrade and reduced target from Rothschild Redburn, the company’s acquisition activity and new consumer features, and the range of broker assessments - as they assess near-term performance and longer-term positioning in a changing payments landscape.