This article first appeared on GuruFocus.

J.P. Morgan (NYSE:JPM) is effectively telling investors that the payments trade needs a rethink. After a year in which the sector is on pace for its worst non-pandemic performance since the Great Recession, analysts are steering the market back to fundamentalspricing power, cleaner margins, and business models that do not require a turnaround story to work. That shift pushed PayPal (NASDAQ:PYPL) and Fiserv (NASDAQ:FISV) to Neutral, a move driven by mounting evidence that traction could take longer than bulls once hoped. PayPal’s downgrade followed management’s warning about sluggish branded checkout growth, even as the company invests in buy now, pay later and AI-driven agentic commerce. J.P. Morgan still sees long-term potential, but the breakout moment could come later, prompting the bank to trim estimates through 2027 and cut its price target to $70 from $85. The stock traded around $61.29 on Thursday after falling 28% for the year.

Fiserv’s narrative echoes that slowdown. Shares have dropped 67% in 2025, and J.P. Morgan said past over-investment in near-term growth now forces the company to pivot toward service and technology spending that could weigh on 2026 revenue and margins. The late-October earnings resetwhere 2025 guidance was sharply pulled backsparked what analysts described as emotional capitulation, a sentiment that could take time to unwind. The bank had already slashed its price target to $85 from $155 in October, and shares slipped again Thursday to $65.65 despite insider buying.

But J.P. Morgan is not walking away from the entire sector. The firm upgraded Toast (NYSE:TOST) to Overweight with a $43 price target, citing its strong brand affinity across restaurants and a business model that could maintain some of the category’s strongest growth while keeping expenses controlled. Toast shares edged down to $35.02, but analysts see room for recovery. Visa (NYSE:V), meanwhile, remains J.P. Morgan’s top pick. The stock is one of the few payments names up this year, supported by Mastercard’s (NYSE:MA) similar strength. Analysts pointed to Visa’s expansion into blockchain-powered financestablecoins and tokenization includedas a gateway to emerging agentic-commerce themes. That innovation, paired with a long-term valuation the bank views as low relative to the S&P 500, could position Visa well into the next cycle. Visa slipped 1.3% Thursday, while Mastercard fell 2%.