PayPal Holdings Inc. (PYPL) shares managed to climb into positive territory Thursday, shaking off what could have been a rough day after BofA Securities downgraded the stock from Buy to Neutral and slashed its price target to $68 from $93.
What's Behind the Downgrade?
BofA analyst Jason Kupferberg explained that PayPal's core branded checkout business isn't bouncing back as quickly as hoped. The firm expects the fourth quarter to show weaker checkout growth, and 2026 is shaping up to be more of an "investment year" for the payments giant, according to Investing.com. Translation: don't expect fireworks anytime soon.
BofA still sees value in PayPal's massive network of more than 400 million consumer and merchant accounts, and they credit the new leadership team with moving faster on innovation. But until there's clearer proof that the turnaround is actually working, they're taking a more cautious stance.
So Why Did the Stock Go Up?
Here's where it gets interesting. Despite the downgrade, PayPal caught a bid after news emerged from China. Vice Commerce Minister Ling Ji met with PayPal Global VP Richard Nash this week, according to Reuters, citing a ministry statement released Thursday.
Ling reportedly signaled support for new cross-border e-commerce models, which could open doors for PayPal to expand deeper into China's booming digital payments ecosystem. That's the kind of growth story investors like to hear, even when the domestic business is struggling.
A Rough Stretch for Analyst Sentiment
This isn't an isolated event. PayPal has been collecting downgrades like frequent flyer miles lately. Earlier this week, Wells Fargo kept its Equal-Weight rating but dropped its price target to $67 from $74. In early December, Evercore ISI Group maintained its In-Line rating but cut its target to $65 from $75. And on December 4, JPMorgan downgraded the company to Neutral from Overweight, lowering its target to $70 from $85.
Price Action: PayPal shares were trading up 0.64% at $61.55 at the time of publication Thursday.