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Investing.com - UBS raised its price target on Affirm Holdings Inc. (NASDAQ:AFRM) to $85.00 from $56.00 on Friday, while maintaining a Neutral rating on the buy-now-pay-later company. The stock, currently trading near its 52-week high with a market capitalization of $30.8 billion, appears overvalued according to InvestingPro analysis.
The price target increase follows Affirm’s strong operational performance, with gross merchandise volume (GMV), revenue less transaction costs (RLTC), and adjusted operating income all exceeding Street expectations. The company has demonstrated remarkable growth with revenue increasing 38.8% over the last twelve months.
UBS noted that Affirm’s 0% APR loans grew 93% year-over-year in the most recent quarter, compared to 44% growth in the previous quarter, as merchants continue to benefit from improved conversion rates. The company’s top five merchant and platform partners, representing approximately 46% of GMV, grew about 41%.
Despite the positive momentum, Affirm expects GMV growth to slow to 12% at the low end of guidance, partly due to losing a direct integration with a large enterprise partner by the end of the first quarter of fiscal 2026. This partner represented approximately 5% of total GMV in the second half of 2024.
The company is experiencing tailwinds in credit loss provisions and funding costs due to favorable market conditions, consistent execution, and a greater mix of 0% APR installment loans, which typically come from customers with FICO scores averaging 40 points higher than Affirm’s average consumer.
In other recent news, Affirm Holdings Inc. reported strong fourth-quarter fiscal 2025 results, surpassing analyst expectations. The company achieved revenue less transaction costs of $425 million, significantly exceeding the anticipated $394 million. Adjusted EBIT also outperformed forecasts, reaching $237 million against the expected $204 million. Analysts from RBC Capital raised their price target for Affirm to $97, citing strong quarterly performance across key metrics. Stephens also increased their price target to $93, noting a 33% growth in quarterly revenue to $876 million and a 43% rise in gross merchandise volume. TD Cowen adjusted their target to $115, highlighting Affirm’s robust growth and conservative guidance. Despite the positive results, Needham maintained a Hold rating, although it raised its estimates for the company. Truist Securities reiterated its Buy rating, emphasizing Affirm’s earnings success. These recent developments reflect Affirm’s strong financial performance and positive market sentiment.
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