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William Blair, a financial services firm, maintained its positive stance on Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), reiterating an Outperform rating on the company’s stock. The firm’s analyst, Andrew Jeffrey, expressed confidence in the buy-now-pay-later (BNPL) industry and Affirm’s leading position within it. Despite acknowledging the potential for ongoing debate and increased volatility as investors weigh competitive and macroeconomic factors, Jeffrey recommends that investors add to their positions in Affirm.
The analyst noted that the upcoming initial public offering (IPO) of Klarna, a private competitor in the BNPL space, has ironically intensified investor apprehension. The concerns stem from unfavorable comparisons between Klarna and other industry players, including Affirm. Additionally, skepticism about the economics of Klarna’s recently announced contract with Walmart (NYSE:WMT), which is perceived as lacking in pricing discipline, has contributed to investor worries. InvestingPro data reveals Affirm’s strong revenue growth of 46% year-over-year, though the company remains unprofitable with negative EBITDA.
Despite these concerns, William Blair’s outlook on Affirm remains optimistic. The analyst argues that while greater investor scrutiny may temporarily constrain Affirm’s stock performance, the company’s commitment to maximizing the value of its ecosystem positions it as the most investable option in the BNPL sector. According to Jeffrey, this strategic focus is expected to benefit Affirm in the long term, suggesting a robust future for the company amid a competitive landscape. Based on InvestingPro’s Fair Value analysis, Affirm appears overvalued at current levels. Discover more insights and 8 additional ProTips about Affirm’s financial health and market position with an InvestingPro subscription.
In other recent news, Affirm Holdings Inc. announced its expansion of credit reporting to include all pay-over-time products with Experian (OTC:EXPGF), starting April 1, 2025. This move aims to enhance transparency in lending and support consumers in building credit histories. Additionally, Affirm disclosed a significant development involving Walmart, as Walmart’s fintech arm, OnePay, has decided to partner with Klarna for installment loan financing services. Despite this, Affirm maintains its current relationship with Walmart, contributing to approximately 5% of its Gross Merchandise Volume and 2% of its Adjusted Operating Income for the six months ending December 31, 2024.
Analysts have also weighed in on Affirm’s prospects. BMO Capital Markets resumed coverage with an Outperform rating and a $69 price target, highlighting potential growth in Gross Merchandise Volume and Revenue Less Transaction (JO:NTUJ) Costs. Meanwhile, UBS maintained a Neutral rating with a $62 price target, noting Affirm’s ongoing role as a pay-over-time option for Walmart. Mizuho (NYSE:MFG) Securities defended Affirm amid concerns about Walmart’s dealings with Klarna, suggesting that Affirm’s business remains intact.
These recent developments reflect Affirm’s strategic positioning in the market and the ongoing analyst interest in its performance. As Affirm continues to navigate its partnerships and market conditions, these updates provide insights into the company’s current and future operations.
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