PayPal released its second quarter earnings report last night, posting solid results and increasing its guidance, but it wasn’t enough to please investors. The company has received at least one downgrade, two price target decreases and, interestingly, one price target increase. Indeed, analyst views on this one are mixed.

PayPal

PayPal sees strength across the board

The company’s revenues grew 15% year over year to $2.65 billion, coming out ahead of consensus at $2.6 billion. Adjusted earnings were in line with Wall Street’s expectations at 36 cents per share. The number of active user accounts increased 11% from last year, and engagement increased 13% to 29.4. Total payments volume grew 29% on a currency-neutral basis as merchant services increased 36%. Venmo recorded 141% growth year over year as mobile total payments volume grew 56% and was 28% of the total.

Cantor Fitzgerald analyst Youssef Squali and team trimmed their price target for PayPal following last night’s earnings report, moving from $48 to $46 per share, although they maintained their Buy rating. They see a key tailwind for growth is the rising adoption of One Touch, which was live with more than 25 million customers during the quarter, an increase from more than 21 million in the first quarter and more than 15 million in the fourth quarter.

Pacific Crest analysts also cut their fair value estimate for PayPal from between $39 and $42 to between $38 and $40 per share.

On the flip side, Wedbush analysts Gil Luria and Aaron Turner bumped up their price target for PayPal from $47 to $50 per share and reiterated their Outperform rating on the stock. They noted that in addition to the revenue beat, the digital payments processor raised its full-year revenue guide and tightened its non-GAAP earnings range at the high end. Management now projects revenue of between $10.75 billion and $10.85 billion and non-GAAP earnings of $1.47 to $1.50 per share.

Analysts disagree on PayPal’s deal with Visa

Along with the second quarter earnings report, PayPal also announced a partnership with Visa, ending a long-standing feud with the company. Analysts disagree about the deal, with Wells Fargo analysts downgrading PayPal from Outperform to Market Perform because of it. They believe the deal will pressure funding estimates, creating a situation in which they see upside earnings revisions as being less likely and valuations being unlikely to expand.

As a result of the deal, they expect PayPal shares to enter a “‘holding pattern'” while the market tries to balance the attractive top-line/ secular story with the new margin paradigm.” They believe this will come as a result of investors trying to figure out when the inflection point for the benefits of the deal with Visa will arrive.

Susquehanna analysts seem to be taking the middle ground on this, saying they were “encouraged by the spirit” of the partnership and “its potential to expand PayPal ubiquity.” However, they also pointed out that PayPal wasn’t ready to reiterate their previous midterm guidance, which leaves them with questions.

Squali was more positive on the partnership, noting that while it results in higher costs for PayPal, the long-term benefits could prove to be “transformative” for the company. He explained that volume incentives from Visa and higher TPV from increased customer usage and merchant adoption could offset these higher costs. He also said it’s difficult to predict the net impact, noting that management said they need until the end of the year to gauge the net impact of the partnership on PayPal’s future. However, he added that the biggest part of the deal is that PayPal will be able to use Visa’s tokenization services, thus enabling it to tap into point-of-sale opportunities, which is failed to do thus far.

The Wedbush team was even more bullish on the Visa partnership, saying that they believe it could create “unprecedented upside” and also “a myriad of benefits” from PayPal. Among the benefits they see are the removal of threats from Visa or banks, volume incentives, the removal of some fees, and less friction for customers.

PayPal shares tumbled by as much as 7.28% to $37.21 during regular trading hours on Friday,