BMO Capital resumes Affirm stock with Outperform, $69 target

On Thursday, BMO Capital Markets resumed coverage of Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), assigning an Outperform rating and setting a price target of $69.00. The firm’s analyst cited a potential recovery path for the company despite recent challenges in the market. According to InvestingPro data, analyst price targets currently range from $45 to $85, reflecting diverse market expectations.

Affirm Holdings Inc.’s shares have experienced a significant decline, dropping over 40% from their recent peaks. This downturn reflects investor actions to reduce exposure and a growing concern over the likelihood of an economic recession. With a beta of 3.64 and a market capitalization of $15.27 billion, the stock’s high volatility is evident in its recent performance. BMO Capital’s analysis suggests that while a mini credit cycle is anticipated in fiscal year 2026, there is still an opportunity for Affirm to achieve approximately $4.00 in adjusted earnings per share (EPS) by fiscal year 2027 if the credit environment normalizes. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 12.29, though it remains unprofitable over the last twelve months.

The resumption of coverage by BMO Capital comes with a positive outlook, as the analyst expects Affirm to gain from medium-term growth in Gross Merchandise Volume (GMV) and Revenue Less Transaction (JO:NTUJ) Costs (RLTC). Supporting this optimistic view, InvestingPro data reveals impressive revenue growth of 46.27% in the last twelve months. Current market expectations seem to factor in a significant slowdown, but BMO Capital points to several factors that could bolster Affirm’s performance. These include accelerating direct-to-consumer growth, strong momentum for the company’s Affirm at Checkout feature, and potential RLTC benefits stemming from lower interest rates.

The analyst’s commentary indicates a belief in Affirm’s resilience and potential for growth despite the broader market’s hesitations. The company’s strategic position and the identified tailwinds are expected to contribute positively to its financial metrics and overall performance in the coming years.

BMO Capital’s coverage and the $69 price target reflect a vote of confidence in Affirm’s business model and future prospects, even as the company navigates a challenging economic landscape. The analyst’s perspective offers a contrast to the current market sentiment, which has been marked by a retreat from the stock amid broader concerns.

In other recent news, Affirm Holdings Inc. announced its plan to expand credit reporting to include all its pay-over-time products with Experian (OTC:EXPGF) starting April 1, 2025. This move is aimed at enhancing transparency in lending and helping consumers build their credit histories. Meanwhile, UBS maintained a Neutral rating on Affirm with a price target of $62, noting the company’s ongoing relationship with Walmart (NYSE:WMT) through its OnePay installment loan offering. However, Affirm’s partnership with Walmart faced a challenge as Klarna was reported to become the exclusive buy-now-pay-later provider for Walmart in the U.S., replacing Affirm. This development was confirmed through an 8-K filing, where Affirm disclosed that Walmart’s fintech arm, OnePay, will work with Klarna for installment loan financing services. Despite this, Affirm continues to offer its payment options to Walmart shoppers through other channels. Mizuho (NYSE:MFG) Securities defended Affirm against concerns over its Walmart exposure, emphasizing that the Klarna partnership does not impact Affirm’s existing business with Walmart. Affirm’s recent financial disclosures revealed that transactions through its integrated program with Walmart accounted for about 5% of its Gross Merchandise Volume and around 2% of its Adjusted Operating Income for the six months ending December 31, 2024.

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