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Tuesday, Affirm Holdings Inc. (NASDAQ:AFRM) shares maintained a positive outlook as Goldman Sachs reiterated a Buy rating with a $56.00 price target. The stock has shown strong momentum with a 20% gain over the past week, trading at $50.61. According to InvestingPro data, analyst price targets range from $45 to $85, reflecting mixed sentiment on this $16.27 billion market cap fintech company. The endorsement follows Affirm’s announcement of an expanded partnership with J.P. Morgan Payments, enabling U.S. merchants on J.P. Morgan’s Commerce Platform to offer Affirm’s payment options at checkout.
Affirm’s enhanced agreement with J.P. Morgan allows for the integration of its real-time underwriting capabilities, providing consumers the choice to use Affirm as a payment method upon approval after a quick eligibility check. Customers will have the flexibility to select between biweekly or monthly plans, catering to purchases ranging from $35 to $30,000 and offering term lengths from 30 days to 60 months. Through this multi-year agreement, Affirm will become a part of the J.P. Morgan Payments Partner Network.
The deal with J.P. Morgan Payments arrives just after Affirm’s recent expansion with Adyen (AS:ADYEN), which now allows Adyen’s U.K. merchants to implement Affirm’s pay-over-time solutions at checkout. Both J.P. Morgan and Adyen are significant payment service providers (PSPs) and merchant acquirers, with J.P. Morgan primarily serving the U.S. market, handling over $2.5 trillion in volume, and Adyen having a strong presence in Europe with $1.4 trillion in volume in 2024. Affirm’s aggressive expansion comes amid impressive revenue growth of 46% year-over-year, as reported by InvestingPro, though the company remains unprofitable with a net loss in the last twelve months.
The strategic partnerships with J.P. Morgan and Adyen align with Affirm’s distribution strategy, which seeks to leverage the e-commerce sector where enterprise merchants play a dominant role. These collaborations are expected to enhance Affirm’s reach, especially in addressing the long tail of merchants at scale. While Affirm already has significant coverage of the U.S. e-commerce market, these partnerships are seen as a step forward in expanding their presence and addressing smaller merchant locations.
Goldman Sachs analyst notes that buy now, pay later (BNPL) options have been gaining traction at online checkouts, indicating a consumer preference for simple and non-revolving payment plans. The success of new payment methods often hinges on distribution, and Affirm’s agreements with PSPs like J.P. Morgan and Adyen are likened to the distribution strategies of established issuers such as American Express (NYSE:AXP).
Goldman Sachs sets the 12-month price target for Affirm based on an approximately 18x EBIT multiple on projected estimates for the fifth to eighth quarters. The firm also acknowledges potential risks, including a challenging macroeconomic environment, heightened competition, and the possibility of adverse regulatory changes. InvestingPro analysis reveals additional insights through 10+ exclusive ProTips and comprehensive financial metrics, available in the Pro Research Report. This detailed analysis, covering everything from valuation to growth prospects, is part of InvestingPro’s coverage of 1,400+ top US stocks, helping investors make more informed decisions in volatile markets.
In other recent news, Affirm Holdings Inc. has been the subject of various analyst evaluations and strategic developments. BMO Capital Markets resumed coverage of Affirm, assigning an Outperform rating and setting a price target of $69. The firm highlighted a potential recovery path for Affirm, predicting approximately $4.00 in adjusted earnings per share by fiscal year 2027 if the credit environment stabilizes. Meanwhile, William Blair maintained its Outperform rating, expressing confidence in Affirm’s position within the buy-now-pay-later industry, despite competitive pressures.
UBS maintained a Neutral rating on Affirm with a price target of $62, noting the company’s ongoing partnership with Walmart (NYSE:WMT), which contributes significantly to its Gross Merchandise Volume. Mizuho (NYSE:MFG) Securities defended Affirm against concerns over its exposure to Walmart amid Klarna’s involvement, emphasizing that Affirm’s business with Walmart remains unaffected.
Additionally, Affirm announced plans to expand its credit reporting to include all pay-over-time products with Experian (OTC:EXPGF), starting in April 2025. This move is aimed at enhancing financial transparency and helping consumers build credit histories. These developments reflect Affirm’s strategic efforts to solidify its market position and adapt to evolving economic conditions.
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