RBC Capital lifts Affirm stock price target to $81 from $67

On Friday, RBC Capital Markets updated its outlook on Affirm Holdings Inc. (NASDAQ:AFRM), raising the company’s price target from $67.00 to $81.00 while maintaining a Sector Perform rating on the stock. The adjustment follows Affirm’s announcement of a strong fiscal quarter, exceeding expectations and increasing its forecast for fiscal year 2025. According to InvestingPro data, Affirm’s stock has shown remarkable momentum with a 156% return over the past six months, though current valuations suggest the stock is trading above its Fair Value.

Affirm’s recent performance was bolstered by significant strides in operational efficiency and transaction cost improvements. RBC Capital’s analyst Daniel Perlin noted these enhancements, along with potential growth opportunities stemming from the Affirm Card, a partnership with Apple (NASDAQ:AAPL) Pay, and an expansion in the UK market, including an impending Shopify (NYSE:SHOP) integration. The company maintains strong liquidity with a current ratio of 17.58, though InvestingPro analysis indicates ongoing profitability challenges with negative EBITDA of $291.77 million in the last twelve months. For deeper insights into Affirm’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The revised financial estimates by RBC Capital for Affirm now stand at $35.1 billion in Gross Merchandise Volume (GMV), $3.16 billion in revenue, and $1.44 billion in revenue less transaction expense for fiscal year 2025. For fiscal year 2026, the projections have been updated to $43.7 billion GMV, $3.90 billion in revenue, and $1.74 billion in revenue less transaction expense. These figures represent an increase from the previous estimates of $34.3 billion GMV, $3.05 billion in revenue, and $1.35 billion in revenue less transaction expense for FY25, and $42.9 billion GMV, $3.80 billion in revenue, and $1.71 billion in revenue less transaction expense for FY26.

The positive adjustments reflect RBC Capital’s increased confidence in Affirm’s profitability trajectory, as the company continues to execute its strategic initiatives and expand its market presence. Affirm’s recent quarter’s performance, along with its updated guidance, has prompted the firm to revise its long-term financial projections for the company.

In other recent news, Affirm Holdings Inc. has been the subject of several analyst upgrades following impressive second-quarter results. Mizuho (NYSE:MFG) Securities increased Affirm’s price target to $84 from $78, maintaining an Outperform rating. This was driven by robust performance with Revenue Less Transaction (JO:TCPJ) Costs (RLTC) reaching $419 million, surpassing the guidance range of $350 to $370 million. Similarly, JMP Securities raised its price target for Affirm to $85, citing the company’s potential to disrupt the traditional credit card sector.

Affirm also received an upgrade from Compass Point, which lifted the stock rating to Neutral from Sell and raised the price target to $61 from $20. This revision reflects a more optimistic outlook on the company’s growth and profitability prospects. The analysts highlighted Affirm’s capacity to re-accelerate growth and benefit from operating leverage.

In addition, Affirm and Liberty Mutual Investments expanded their existing forward flow loan purchase program. Under the new terms, Liberty Mutual will commit to purchasing installment loans from Affirm, with the potential outstanding amount reaching up to $750 million.

Finally, Needham maintained a Hold rating on Affirm, following an evaluation of the potential advantages of the company obtaining a banking license. The research firm is analyzing whether Affirm would benefit from either acquiring a bank or applying for an Industrial Loan Company (ILC) charter. The outcome of this analysis could significantly impact Affirm’s future financial performance.

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