Shares of PayPal (PYPL) experienced a decline on Thursday following a downgrade by analysts at Morgan Stanley. The firm has adjusted its rating on PYPL from Equal-Weight to Underweight, marking the third downgrade for the payment platform within this month.
Analyst James Faucette expressed apprehension regarding the slow progress of enhancements to PayPal”s branded checkout integrations. In a note to investors, he highlighted that these anticipated upgrades have proven to be more complicated and time-consuming than initially forecasted, failing to significantly boost user engagement as hoped.
As a result of the revised forecast, PYPL shares dipped by 1% on Thursday, contributing to an overall decline of 2% since the start of the week. Faucette noted, “We see increased risk of downward adjustment” in earnings per share (EPS) amid sluggish growth. He further indicated that PayPal may need to persist in its investments to tackle these challenges while also increasing marketing expenditures to mitigate share losses.
This downgrade follows a brief uptick in PayPal”s stock earlier in the week, when the company announced its application to establish a certified U.S. bank. The submission was made to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation, with plans for the bank to provide lending solutions tailored for small businesses across the United States.
Other financial institutions have also expressed bearish sentiments regarding PYPL stock. Bank of America Securities similarly downgraded PayPal due to delays in revitalizing branded checkout growth, while J.P. Morgan issued a downgrade earlier in the month.
