As PayPal Shifts Focus From Payments To Commerce, Analysts Urge Caution Amid 'Ambitious' Plans

PayPal Holdings Inc. PYPL has made several announcements and shared its growth strategy for the upcoming years, on its investor day on Tuesday attracting mixed response from analysts.

What Happened: Among other important announcements, the fintech giant introduced its latest merchant product, PayPal Open, a unified platform that provides businesses with a comprehensive range of checkout solutions, including PayPal, Venmo, Fastlane, and Pay Later options.

The company also renamed Braintree to PayPal Enterprise Payments as part of its rebranding. Additionally, PayPal revealed an enhanced sales partnership with point-of-sale terminal provider Verifone.

PayPal forecasted that its non-GAAP EPS will grow by a percentage in the low teens by 2027, with a long-term growth target of 20%. Additionally, the company anticipates transaction margin dollars to rise by high single digits by 2027 and exceed 10% growth in the long run.

In a regulatory filing, PayPal announced executive vice president and CFO, Jamie Miller, has been appointed to the expanded role of chief financial and operating officer.

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Why It Matters: PayPal posted strong fourth-quarter results with consensus beating revenue and earnings. Its investor day announcements were awaited by investors who are watching the strategic moves of the company amid competition from Apple Inc‘s AAPL Apple Pay.

However, the announcements have received mixed reactions from analysts. Barclays analyst Ramsey El-Assal wrote in an investor note, "PayPal laid out a very compelling vision of the future, with the company set to pivot away from ‘payments' and into ‘commerce,'" reported MarketWatch. TD Cowen analyst Bryan Bergin rated the stock as ‘Hold’ with a price target of $83. Bergin also called the fintech giant’s 2027 targets ‘ambitious’, as per Barrons.

Meanwhile, William Blair analyst Andrew Jeffrey suggested a cautious approach for investors citing competition from Apple Pay. He also wrote, "We have particularly low conviction that PayPal can drive a higher long-term transaction yield, creating a headwind to transaction dollar growth."

The PayPal stock soared nearly 25% over the past 12 months but declined 14.5% year-to-date, as per data from BenzingaPro.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.