TLDR
- J.P. Morgan downgrades PayPal and Fiserv to Neutral while elevating Visa as the firm’s favorite payments play for 2026
- Payments sector faces worst year since 2008 financial crisis, with most stocks posting double-digit losses
- Toast receives upgrade to Overweight as analysts see restaurant-focused platform maintaining best-in-class growth rates
- PayPal price target drops to $70 from $85 as checkout business shows weak momentum and turnaround extends
- Visa’s blockchain strategy and tokenization push give exposure to emerging AI-powered commerce trends
JPMorgan analysts put Visa stock at the top of their 2026 payments watchlist while stepping away from former favorites PayPal and Fiserv. The call came Thursday as the firm published its outlook for a sector that’s been hammered this year.
Lead analyst Tien-tsin Huang wrote that the team is “going back to basics” after what he called the industry’s worst 12 months in 15 years. That means focusing on companies with pricing power and healthy profit margins. Companies stuck in turnaround mode didn’t make the cut.
Visa shares edged up 0.5% Thursday while Mastercard slipped 0.2%. Both card networks have managed to stay in positive territory for 2025 while competitors have sunk into deep red.
The research note didn’t pull punches on which stocks to avoid. PayPal and Fiserv both got downgraded from Overweight to Neutral as JPMorgan said it’s “too late to sell and too early to buy” on these names.
Payment Stocks Hit Reset Button
The payments world is limping into 2026 after a year to forget. JPMorgan said the sector posted its weakest performance since the Great Recession if you exclude the COVID crash.
Slower growth across the industry spooked investors. So did worries about commoditization and questions about return on investment for technology spending. The combination created a rough environment for payment processor stocks.
Visa managed to dodge most of the carnage. The company trades near a 10-year low in valuation compared to the S&P 500. JPMorgan sees that gap as an opportunity rather than a warning sign.
The analysts pointed to several factors working in Visa’s favor. The company gave what they called reasonable guidance for fiscal 2026. Tokenization pricing could provide extra upside as that technology spreads. And Visa’s work in blockchain positions it for growth in agentic commerce.
That last term refers to AI systems that can make purchases on behalf of users. JPMorgan thinks tokenization will be critical infrastructure for this emerging market. Visa’s early moves into the space caught the analysts’ attention.
PayPal stock closed at $61.20 Thursday after a slight decline. Shares have fallen 28% in 2025 through Wednesday as the company struggles to reignite growth. The finance chief warned earlier this week that the branded checkout business remains sluggish.
JPMorgan cut its earnings estimates for PayPal through 2027. The price target fell to $70 from $85. The analysts said they appreciate PayPal’s investments in buy now pay later and AI commerce. But the payoff looks further away than hoped.
Fiserv Faces Long Recovery
Fiserv has had it worse. The stock crashed 67% in 2025 as the merchant services company dealt with the aftermath of poor strategic choices. Shares dropped another 0.6% to $66.55 on Thursday.
The company cut its 2025 outlook sharply in late October. The move shocked investors and triggered heavy selling. JPMorgan said the reset caused an “emotional capitulation” that will take time to heal.
The problem stems from over-investing in short-term growth initiatives. Now Fiserv needs to spend on service and technology improvements. That spending will pressure both revenue and profit margins in 2026, according to the analysts.
JPMorgan had already slashed its Fiserv price target to $85 from $155 back in October. Thursday’s downgrade added insult to injury for shareholders who’ve watched billions in market value evaporate.
Toast stock offered a bright spot in the research note. JPMorgan upgraded the restaurant point-of-sale provider to Overweight from Neutral with a $43 price target.
Shares jumped 1.7% to $35.79 Thursday. That gain nearly erased Toast’s losses for the year. The stock had been down 6% year-to-date even as earnings estimates climbed 27%.
The analysts wrote they’ve been “eagerly waiting for the right time to take a seat at the Toast table.” They see the company as a legitimate software-led payments leader with room to run. Toast has built strong brand recognition among restaurant owners, giving it an edge in that vertical market.
JPMorgan expects Toast to maintain top-tier growth rates while keeping expenses in check. The firm highlighted Toast’s Rule of 54% for 2026, a metric combining growth rate and profit margin.
Mastercard also got positive marks though it wasn’t upgraded. JPMorgan sees both card networks benefiting from AI commerce trends. The firms control the rails that process most card transactions in the United States.
Visa and Mastercard have held up better than most payment stocks this year. That relative strength reflects their duopoly position and ability to raise prices without losing volume.
