UBS downgraded Klarna to Neutral from Buy and cut its price target to $16 from $23, pointing to a second-half guidance cut and the departure of two long-time executives. The stock has plunged 31% over the past week and trades near its 52-week low.
UBS downgraded Klarna (NYSE:KLAR) to Neutral from Buy and lowered its price target to $16.00 from $23.00 after the buy-now-pay-later firm cut its second-half growth outlook.
Guidance Cut Points to Slower International Growth
The downgrade follows Klarna's second-quarter 2026 results and a reduction in the company's second-half 2026 gross merchandise volume guidance to approximately $3.4 billion excluding foreign exchange at the high end of updated guidance. UBS said the annualized impact of the guidance cut, which it estimates at around $6 billion, points to a meaningful decline in international growth expectations, particularly for Germany.
As a result, the stock has plunged 31% over the past week and is down 50% year-to-date, trading at $14.33—just above its 52-week low of $12.06.
Two Long-Time Executives Are Leaving
UBS also flagged that Klarna's chief financial officer and chief marketing officer, both long-time executives at the company, are departing over the coming quarters. Still, the bank said Klarna keeps company-specific positives, including new distribution partnerships with Apple, ramping card programs, and a nascent U.S. Fair Financing business in an attractive global market.
Other Banks Trim Targets After Mixed Earnings
The reaction follows a mixed earnings report: Klarna posted second-quarter earnings per share of $0.01, beating TD Cowen's estimate of negative $0.03 and consensus expectations of negative $0.05, while cutting its full-year gross merchandise volume forecast to $150 billion from over $155 billion. In response, BMO Capital reduced its price target to $15 from $19 while keeping a Market Perform rating, and Morgan Stanley cut its target to $17 from $21, citing a softer European volume outlook and a slower growth trajectory. TD Cowen lowered its target to $18 from $19 but kept a Hold rating, while Needham reiterated Hold, noting the earnings beat was bolstered by U.S. growth and a sale of back book receivables.
Source: Investing.com
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