PayPal’s ‘baggage’ causes stock downgrade

The fintech category is “better positioned” than many other tech groups for a strong 2023, according to one analyst, but some names may fare better than others.

When SMBC Nikko Securities America analyst Andrew Bauch upgraded shares of Lightspeed Commerce Inc.


and Marqeta Inc.

On Wednesday, he also downgraded PayPal Holdings Inc.

and currently have a bearish view on the stock. Bauch is worried about PayPal’s potential loss of market share for its branded payments business.

“Few names in our coverage carry so much burden as we head into the new year,” Bauch wrote of PayPal as he downgraded his rating on the stock from neutral to underperforming. fruit.

Bauch reversed that name change last summer, arguing that activists at Elliott Management would help drive profit margins at PayPal and would be well received by Wall Street.

“We continue to believe that a substantial drawdown of investment will
PYPL erosion [long-term] growth prospects,” he said.

PayPal shares fell 3.6% in Wednesday trading.

Bauch is more bullish on Lightspeed, upgrading the payment technology company’s stock to better from neutral in his latest note. He admits that some investors might see the move as a “leap in confidence,” but in his view, “the once-favorite payments story could find life.” new in 2023.”

Despite Bauch’s caution about the upcoming quarterly report, he expects that “management has enough argument to build optimism for the years to come.”

He’s also taken a neutral stance on Marqeta, while he previously rated the stock underperformer.

“It is important that we see a reasonable possibility that two of the biggest overhangs in the story will be alleviated in the near term,” wrote Bauch, referring to the renegotiation of the operating agreement. of the card issuer with Block Inc. the company’s next chief executive officer.

Bauch’s top pick in this area is Flywire Corp.
Paymentus Joint Stock Company
Shopify Company
and Toast Inc.
all of which he rated as overweight.


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