On Friday, JMP Securities initiated coverage on shares of Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), a key player in the Buy Now Pay Later (BNPL) sector, with a Market Perform rating. The firm highlighted Affirm's significant role in the industry, having processed $73 billion in consumer loans since its inception in 2012.
Affirm's business model has evolved over time, moving from a primary focus on pay-in-4 and 0% interest loans funded by merchant discount fees, to a more diversified revenue stream. This shift includes a balance of credit and customer mix that has, according to JMP Securities, strengthened the company's position in the market.
The firm also noted the benefits of Affirm operating its own closed-loop payment network. This network allows Affirm to collect proprietary transaction-level data which is used to enhance their underwriting processes. The analyst from JMP Securities stated that they appreciate the advantages this provides to the company.
Since its founding, Affirm has also been active in the securitization market, issuing $8 billion in securitizations. This move is part of the company's strategy to diversify its financial activities and revenue sources.
As the BNPL industry continues to grow, Affirm's established presence and ongoing efforts to adapt its business model and revenue strategies have positioned it as a noteworthy company within the sector. The Market Perform rating reflects JMP Securities' view of the company's current standing and potential in the evolving financial landscape.
In other recent news, Affirm Holdings has been the subject of several analyst reviews and regulatory updates. Goldman Sachs (NYSE:GS) upgraded Affirm Holdings to a 'buy' rating, highlighting the company's effective credit management and competitive edge in underwriting.
The firm also adjusted its 12-month price target for the company to $42.50. On the other hand, CFRA maintained a 'sell' rating on Affirm, with future revenue forecasts for the fiscal years 2024 to 2026 set at $2.3 billion, $2.7 billion, and $3.2 billion respectively.
BTIG initiated coverage on Affirm with a neutral rating, predicting the company's Gross Merchandise Volume (GMV) to grow at a rate of 25-35% year-over-year. However, the firm also warned that market expectations and potential higher delinquencies or losses could pose challenges to Affirm's stock performance. RBC Capital maintained its 'Sector Perform' rating on Affirm, but lowered its downside valuation for the company to $25, reflecting the current market dynamics.
These developments come amid changes in the regulatory landscape, with the U.S. Consumer Financial Protection Bureau (CFPB) extending certain consumer protection rules typically applied to credit cards to the Buy Now, Pay Later (BNPL) industry, impacting companies like Affirm.
InvestingPro Insights
With Affirm Holdings Inc. (NASDAQ: AFRM) making significant strides in the Buy Now Pay Later (BNPL) sector, real-time data from InvestingPro provides additional insights into the company's financial health and market performance. Affirm's market capitalization stands at $9.42 billion, reflecting its substantial size within the industry. Despite the lack of profitability in the last twelve months and analysts not expecting profitability this year, the company has experienced impressive revenue growth of 40.05% in the last twelve months as of Q3 2024. This growth is indicative of Affirm's expanding market presence and adoption of its services.
InvestingPro Tips highlight that Affirm's stock price has been characterized by high volatility, which could be a point of consideration for potential investors. Additionally, while the stock has seen a significant decline over the past three months, with a -18.25% return, it has managed a remarkable return of 96.77% over the last year, showcasing the dynamic nature of its market performance. For those interested in deeper analysis, InvestingPro offers additional tips on Affirm, and readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. There are currently 9 additional InvestingPro Tips available for Affirm, which could provide valuable guidance for investors looking to navigate the volatile landscape of BNPL stocks.
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