Raymond James is bearish on PayPal despite its strong start to 2023. Analyst John Davis downgraded shares of PayPal from Outperform to Market Perform, adding that he expects PayPal’s market share decline to continue. “Simply put, while most investors expect early 2023 revenue growth guidance to come in below the Street (5-7% versus Street +9%, RJe +7%), we believe the 2023 top The line outlook will be flat to negative growth. The resulting share loss story for Branded Checkout (vs. E-Com MSD+) will increase even more,” Davis wrote in a Monday client note. Davis continued, “Despite the fact that the stock is still relatively cheap (16x 2024e non-GAAP EPS, 14x FCF), we are moving to the side because we believe that if Branded Checkout can truly become a content stock.” Meaningful multiplex expansion will prove difficult.” He added that data from CyberWeek in the final quarter of 2022 shows that PayPal branded checks have lost market share, largely to Apple Pay. Processed payments also declined 6% year over year, which will further compound the issues of the company’s share loss. The analyst noted that although he’s confident in PayPal’s abilities to cut management costs — which will help it exceed prior earnings per share growth of 15% in 2023 — the margin trajectory for post-2024 is unclear. The company announced last week that it would lay off 7% of its workforce in a bid to reduce its cost structure. PayPal shares fell 3% following the downgrade. PayPal stocks are up 17% in 2023, but they’re down more than 34% over the past year. PayPal is set to report fourth-quarter earnings after the bell on Thursday. —Michael Bloom of CNBC contributed to this report.