Zhitong Finance learned that Bernstein downgraded PayPal Holdings (PYPL.US) from "Outperform" to "Market Perform" due to competition and valuation issues, but raised the target price to US$80 from US$75.
Harshita Rawat, an analyst at Bernstein, said in a research note: "While product velocity is picking up, we remain concerned about competitive pressure on the cash cow core buttons, which are still typically priced higher than comparable products. Moreover, we believe there will be some negative revisions (gross margin) by 2025 due to the interest rate impact.
Bernstein raised the stock's rating in late July, citing improved product velocity and execution under new management, higher profits, and attractive valuations. However, considering the recent stock performance, there is no room for the target price to rise.
It has risen about 33% so far this year, and its current trading price is 26% above its 200-day simple moving average.
Despite this, SA contributing analyst Daniel Jones said: "The company has finally shown that it can turn things around, and management is continuing to innovate. Moreover, the stock is cheap both in absolute terms and relative to its peers, and I do indeed believe that it is reasonable to maintain a "Strong Buy" rating at this point.