Affirm Holdings Inc (NASDAQ: AFRM) received a reiteration of its Buy rating from Truist analyst Andrew W. Jeffrey, along with an unchanged price target of $60. Despite being down 19% year to date, Jeffrey sees this as an opportunity for investors.
The analyst acknowledged that concerns about credit, liquidity, and the durability of buy now, pay later (BNPL) services have sidelined some investors. However, Jeffrey expects Affirm to demonstrate strong performance in its holiday quarter, including gains in Enterprise customer share, stable credit trends, better-than-expected revenue less transaction costs (RLTC), and strong liquidity.
Jeffrey also highlighted the company’s strong Cyber Monday BNPL growth, positive holiday momentum, and the potential upside from the Affirm Card. He believes that Affirm is positioning itself as a daily spend product at the intersection of debit and credit, which is a durable tender type.
The analyst’s bullish outlook sets him apart from the Street. He believes that BNPL can grow from its current less than 1% share of the total U.S. tender to something much more significant, similar to the growth experienced by debit in the past 20+ years. Jeffrey estimates that Affirm could become a nearly $16 billion revenue company with over $4 billion of EBITDA, assuming BNPL accounts for more than 7.5% of U.S. tender.
In terms of financial projections, the analyst expects second-quarter revenue and EPS of $529.85 million and $(0.43) respectively, surpassing consensus estimates of $518.75 million and $(0.72).
As of the last check on Friday, AFRM shares were trading higher at $40.38, up 1.79%.
Overall, Truist analyst Andrew W. Jeffrey remains bullish on Affirm Holdings Inc, confident in its potential for growth in the BNPL space. Despite early-year weakness, he sees the current dip as an opportunity for investors to take advantage of the company’s strong performance in the holiday quarter and its positioning as a daily spend product. With a Buy rating and a price target of $60, Jeffrey’s outlook suggests optimism for Affirm’s future prospects.
