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Investing.com -- Mizuho analysts argued in a note Friday that concerns over PayPal (NASDAQ:PYPL)'s Branded Button market share are exaggerated, maintaining their Outperform rating and $100 price target on the stock.
"Proprietary analysis shows that PYPL's Branded Button share loss worries are overblown," said Mizuho (NYSE:MFG).
The firm said its analysis of PayPal's largest e-commerce partners, including Nike (NYSE:NKE), Etsy (NASDAQ:ETSY), and Airbnb (NASDAQ:ABNB), reveals that the company's Branded Total (EPA:TTEF) Payment Volume (TPV) is growing in line with or faster than its key partners' sales trends.
"The work shows that PYPL is growing in line with/faster than the weighted-average, share-adjusted growth of its major partners," Mizuho stated, noting Branded TPV growth of +6% FXN compared to a +5% growth rate among partners.
Over the past 12 months, Mizuho says PayPal's growth has outpaced that of nine out of its 14 largest merchants.
The analysts see continued strength in Branded Checkout as a key factor for PayPal's valuation. They explain that initiatives like PayPal Everywhere, merchant migration to its updated checkout platform, and Fastlane are expected to provide additional momentum.
"Stability in Branded — along with contribution from new initiatives like PayPal Everywhere, gradual migration of merchants to the newest checkout experience, and Fastlane — makes the stock an attractive candidate for further re-rating in 2025," they write.
Despite recent debates around Branded Checkout's market share, PayPal's valuation is said to remain compelling.
Mizuho says the stock trades at a multiple nearly a standard deviation below its historical average compared to legacy payment companies.
Mizuho values PayPal at 18x its 2026 earnings estimate, a premium to the sector's 16x average, reflecting confidence in Branded TPV growth, improving transaction margins, and new growth opportunities.
The firm acknowledges some near-term headwinds in PayPal's Unbranded business, as the company sheds low-margin contracts.
However, this strategy is expected to enhance profitability over time. "Branded remains solid," and "trends are healthy," Mizuho emphasized.
