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4:52 a.m. May 15, 2020 - By Emily Bary
PayPal stock falls after downgrade at BMOShares of PayPal Holdings Inc. are down 1.3% in premarket trading Friday after BMO Capital Markets analyst James Fotheringham downgraded the stock to market perform from outperform "due exclusively to our shift in investment strategy towards credit-sensitive sub-sectors." While he's upbeat about PayPal's two-sided network, its progress with Venmo monetization, its recent purchase of Honey, and its role in the transition to digital commerce, he argued that these catalysts are already reflected in PayPal's share price. He now tilts toward credit-sensitive names as his balance-sheet simulation analysis finds that the 19 large-cap banks and specialty lenders that he covers should have enough earnings power to "withstand impending loan losses without needing to tap the equity markets." PayPal shares have added 17% over the past three months as the S&P 500 has fallen 16%.
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