Raymond James is bearish on PayPal despite its strong start in 2023. Analyst John Davis downgraded PayPal shares to market perform from outperform, saying that he expects PayPal's market share losses to continue. "Simply put, while most investors expect initial 2023 revenue growth guidance to come in below the Street (buyside 5-7% vs Street +9%, RJe +7%), we believe the 2023 top line outlook will imply flat to negative growth for branded checkout (vs e-com MSD+) which will likely result in the share loss narrative growing even louder," Davis wrote in a Monday client note. Davis continued, "Despite the fact the stock is still relatively inexpensive (16x 2024E non-GAAP EPS, 14x FCF), we are moving to the sidelines as we believe meaningful multiple expansion will prove difficult if branded checkout is in fact losing material share." Data from Cyber Week in the final quarter of 2022 suggests that PayPal branded check out lost market share, largely to Apple Pay, he said. Processed payments also declined 6% year over year, which will further exacerbate the company's share loss issues. The analyst noted that although he has confidence in PayPal's management cost-cutting abilities — which would help it exceed its prior per share earnings growth of 15% in 2023 — the margin trajectory for 2024 onwards is unclear. The company announced last week that it would be laying off 7% of its workforce in order to slim down its cost structure. Shares of PayPal dropped more 3% after the downgrade. PayPal's stock has rallied 17% in 2023, but they remain more than 34% lower over the past year. PayPal is slated to report fourth-quarter earnings after the bell on Thursday. —CNBC's Michael Bloom contributed to this report.