The equity research team at BTIG remains unconvinced about PayPal’s (PYPL) shares despite the digital payment giant reporting a Q3 earnings beat and disclosing its tie-up with startup OpenAI.
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PayPal’s collaboration with OpenAI will see its payment solution integrated into OpenAI’s popular ChatGPT AI chatbot starting next year, enabling customers to make purchases directly on the platform. PayPal’s (PYPL) shares climbed more than 14% during early trading on both updates, but they are now retreating amid concerns about consumer spending.
Why Is BTIG Positive But Cautious on PayPal Stock?
PYPL stock remains higher despite the pullback. However, BTIG analyst Andrew Harte noted that while his team views the partnership “positively,” they do not expect PayPal to be ChatGPT’s exclusive payment method as “consumers will ultimately have multiple payment options.”
Harte sees this as a reason to be “cautious” about PYPL stock, even as PayPal itself recently entered into a multi-year partnership with Alphabet’s (GOOGL) Google and Nvidia-backed (NVDA) Perplexity AI to integrate its products into the companies’ services. Yet, the analyst believes the OpenAI partnership will offer PayPal “more tangible and nearer-term revenue opportunity.”
BTIG Sees Additional ‘Reason to Be Cautious’
Speaking further, Harte notes that while BTIG is now “incrementally more positive” about PayPal’s ability to improve its revenue by fiscal year 2027, its team still believes that “there is reason to be cautious over the next few quarters.”
This is even as BTIG increased its guidance for PayPal following the Q3 earnings release: it expects gross profit from PayPal’s operations — minus direct costs and earned interest — to be 0.5% higher in fiscal year 2026. The equity research team also elevated its adjusted EPS expectation for PayPal for the same period by 3.4%.
PayPal’s Flagship Business Draws Concern
Furthermore, BTIG expects PayPal’s revenue to grow more slowly in the coming year, as the fintech’s performance in the prior year was unusually robust. At the same time, PayPal’s increased investments are expected to eat into its future profit growth.
Consequently, Harte stuck to his Neutral/Hold rating on PYPL stock. The rating comes as analysts have expressed concerns about PayPal’s ability to improve growth in its Branded Checkout segment amid rising industry competition. This segment, which houses PayPal, PayPal Pay Later, and Venmo, provides online checkout services on e-commerce platforms.
Is PayPal Stock a Buy, Sell, or Hold?
Across the broader Wall Street, TipRanks’ data shows that PayPal’s shares currently have a Hold rating, based on 10 Buy, 15 Hold, and three Sell recommendations issued by 28 analysts over the past three months.
Moreover, the average PYPL price target of $80.60 suggests about 7% upside from the current level.
