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On Friday, JMP Securities analyst David Scharf revised the price target for Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM) shares, lowering it from $85.00 to $75.00, while maintaining a Market Outperform rating. Currently trading at $54.26 with a market capitalization of $17.37 billion, Affirm’s fiscal third-quarter 2025 results featured a robust 36% growth in Gross Merchandise Volume (GMV) but only met revenue expectations and offered a slight operating income upside. According to InvestingPro data, the company has maintained impressive revenue growth of 46.27% over the last twelve months.
Affirm’s shares declined in aftermarket trading as the company’s significant volume growth did not translate into exceeding revenue forecasts. InvestingPro analysis shows the stock has demonstrated high volatility, though it has delivered a remarkable 55.87% return over the past year. The shift towards offering more 0% interest loans, which have smaller margins compared to interest-bearing ones, resulted in a lower take rate and Return on Loan Capital (RLTC) margin than many had predicted. Despite the strong volumes, the stock gave back gains from the previous day.
The management of Affirm emphasized that their strategy to increase 0% loan offerings was a response to merchant requests for promotional support, rather than a proactive change in direction. JMP Securities sees these market reactions as potential opportunities for investors, highlighting that Affirm’s key fundamental indicators remain unchanged. These include GMV growth, market share gains, stable credit quality, a shift towards GAAP profitability, favorable funding conditions, and a strong competitive position, despite the quarterly variances in product mix. The company maintains strong liquidity with a current ratio of 12.29, indicating robust financial health despite not yet achieving profitability.
Additionally, Affirm’s credit metrics remained stable and met expectations. The company also increased its guidance for all fiscal fourth-quarter metrics, which ends in June. The reduction in the price target to $75 by JMP Securities is attributed to a recalibration of the terminal Price-to-Earnings (P/E) multiple from approximately 22.5x to about 20x. This change reflects a broader contraction in market multiples observed over the past month. Based on InvestingPro’s comprehensive Fair Value analysis, the stock appears slightly overvalued at current levels. Discover more insights and 8 additional ProTips about Affirm in the exclusive Pro Research Report, available with an InvestingPro subscription.
In other recent news, Affirm Holdings Inc. reported its financial results for the third quarter of fiscal year 2025, surpassing earnings expectations with an earnings per share (EPS) of $0.01, compared to a forecast of -$0.01. The company’s revenue slightly exceeded expectations as well, reaching $783.14 million against a forecast of $781.74 million. Affirm experienced a 36% year-over-year growth in Gross Merchandise Volume (GMV), demonstrating robust performance during the quarter. Despite these positive results, Affirm’s stock saw a decline in aftermarket trading, which may reflect broader market trends or investor concerns. The company continues to focus on product innovation, particularly in 0% APR loan offerings and AI integration. Analysts noted Affirm’s strong growth trajectory, with firms like William Blair and Mizuho (NYSE:MFG) commenting on the company’s strategic moves and product offerings. Affirm also projects continued strong GMV growth and is investing in AI and potential international expansion. The company remains committed to its partnerships and strategic initiatives, as highlighted by recent collaborations and ongoing developments.
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