Mizuho raises Affirm stock price target to $84 from $78

On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), increasing the price target to $84.00 from the previous $78.00 while maintaining an Outperform rating on the company’s shares. The revision followed Affirm’s announcement of its second-quarter results, which exceeded expectations. According to InvestingPro data, Affirm’s stock has shown remarkable momentum with a 156% surge over the past six months, though investors should note its historically high price volatility.

Affirm reported a robust performance with Revenue Less Transaction (JO:TCPJ) Costs (RLTC) reaching $419 million against the guidance range of $350 to $370 million. The company’s impressive growth is reflected in its 46.55% year-over-year revenue increase, as reported by InvestingPro. Additionally, the company has updated its Gross Merchandise Volume (GMV) forecast for the fiscal year, raising it from "more than $34 billion" to a new range of $34.74 to $35.34 billion. This update includes a 40 basis points improvement in RLTC as a percentage of GMV, doubling the previously guided increase of 20 basis points.

The company’s GAAP operating income reached a break-even point, which Mizuho analysts see as a significant step toward Affirm’s path to faster GAAP profitability. The analysts were particularly impressed by the strong 70% growth in the volume of transactions with 0% Annual Percentage Rate (APR), which they believe aids merchants in maintaining price integrity while boosting conversion rates.

Furthermore, the positive developments regarding Affirm’s expansion in the United Kingdom (TADAWUL:4280) were noted, where the company is focusing on gaining market share similarly to its growth trajectory in the United States. Based on these strong results, Mizuho has raised its estimates and the price target for Affirm’s stock. The new price target of $84 is an increase from the previous target of $78, reflecting the company’s robust financial performance and promising growth prospects.

In other recent news, Affirm Holdings Inc. has seen a series of positive analyst updates and strategic developments. JMP Securities raised Affirm’s stock price target to $85, citing the company’s potential to disrupt the traditional credit card sector and its robust loan platform. Affirm’s journey towards Generally Accepted Accounting Principles (GAAP) profitability is progressing faster than anticipated, with improvements in unit economics and user engagement.

Compass Point has also upgraded Affirm’s stock rating from Sell to Neutral, raising the price target to $61. This reflects a more optimistic outlook on the company’s growth and profitability prospects, and the expectation that Affirm’s adjusted operating income margin could reach 30% in FY27E.

RBC Capital Markets has increased its price target for Affirm to $67.00, maintaining a Sector Perform rating. This adjustment reflects a more optimistic view of Affirm’s financial prospects and an improving funding environment.

Affirm and Liberty Mutual Investments (LMI) have expanded their existing forward flow loan purchase program, which could see LMI invest as much as $5 billion over time. This strategic growth and capital partnership aim to enhance the availability of consumer credit options while also leveraging investment opportunities.

Lastly, Needham has maintained a Hold rating on Affirm, following the evaluation of the potential advantages of the company obtaining a banking license. The research firm suggests that if Affirm were to acquire a banking license, it could nearly double its GAAP earnings per share (EPS) in the fiscal year 2027 and beyond. However, it also notes that pursuing a bank charter would involve regulatory approvals, introducing execution and timing risks.

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