PayPal (PYPL) needs to reinvest capital and increase spending on marketing and technology to slow its accelerating market share losses, Morgan Stanley said Wednesday in a report.
PayPal's best path forward is to reallocate capital to speed up its Branded Checkout modernization effort, integrate more deeply with hardware wallets, expand Venmo acceptance, and prepare the platform for AI-enabled commerce automation, even if that results in negative earnings growth for a couple of years, the report said.
Morgan Stanley lowered its price target on PayPal stock to $34 from $50 and maintained its underweight rating.
PayPal is expected to deliver $5.6 billion of its $6 billion buyback target this year, which is 118% of projected free cash, the report said.
That scale of capital returns isn't expected to be sustainable, and repurchases are seen totaling $4 billion in 2027-28, or 80% of projected free cash, Morgan Stanley said.
Price: 41.61, Change: -0.10, Percent Change: -0.23
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