PayPal Holdings (PYPL): Among the Worst Performing Fintech Stocks to Buy According to Analysts

PayPal Holdings (PYPL) has been one of the worst-performing fintech stocks in recent years, with its share price plummeting 80% since peaking in 2021. The company's struggles can be attributed to increased competition from tech giants like Apple and Google, as well as a slowdown in online shopping growth following the pandemic. PayPal's gross margins have also been declining, dropping to 45.8% in the fourth quarter of 2023 from 55.9% in 2020. Despite these challenges, some analysts believe that PayPal's stock is now cheap enough to buy.



PayPal's new CEO, Alex Chriss, is leading the charge to turn the company around. At the company's "innovation day" on Jan. 25, management outlined steps to address PayPal's big issues, including making it easier for people to use it to make purchases, increasing profits on its white-label offerings, and focusing on innovation in core products. While the stock fell 3.7% that day, some analysts remain optimistic about PayPal's prospects.



J.P. Morgan Securities analyst Tien-Tsin Huang notes that PayPal is focused on innovating at a faster pace, with its new Fastlane service aimed at increasing transaction completion rates. Huang has a $70 price target on the stock, up 12% from Wednesday's $62.45 close. PayPal's latest earnings report, released on Feb. 7, was another disappointment, with management setting 2024 guidance at $5.10 a share, below the Street consensus for $5.48. However, some analysts argue that this guidance could be a savvy move if PayPal's innovations pay off with better-than-expected results.

PayPal's valuation has fallen significantly in recent years, trading at 12.1 times 12-month forward earnings forecasts, down from a peak of 57.3 times in July 2021. This valuation is more in line with midsize bank stocks, such as U.S. Bancorp and PNC Financial Services Group. While PayPal is still a show-me story, some analysts believe that the company has the potential to turn things around and deliver better-than-expected results.

In conclusion, PayPal Holdings (PYPL) has been one of the worst-performing fintech stocks in recent years, but its stock is now cheap enough to buy according to some analysts. With a new CEO leading the charge and a focus on innovation, PayPal has the potential to turn things around and deliver better-than-expected results. However, the company will need to prove to investors that its margins can bottom and growth can accelerate.