Affirm Holdings Shares Rise After Upgrade

Shares of Affirm Holdings (NASDAQ:AFRM) rose 5.2% in pre-open trade after BTIG analysts upgraded their rating from "neutral" to "buy." They cited the company's path toward GAAP profitability and increasing market share in point-of-sale finance.

Operating Income Margin

BTIG analysts highlighted Affirm's projected operating income margin for fiscal 2025 at 19%, competing closely with American Express (NYSE:AXP), whose margin is at 20%. They expressed confidence in Affirm's ability to exceed this target, with guidance indicating potential for lower expense growth.

Growing Take-Share

Affirm is expected to accelerate its take-share in point-of-sale finance, driven by macroeconomic trends including rising credit losses for traditional card companies like American Express. The company, known for its buy-now-pay-later solutions, has seen impressive growth in its GMV thanks to increased merchant engagement and consumer demand.

Market Position

Analysts foresee 30% year-over-year GMV growth in fiscal 2025, outpacing traditional credit lenders. BTIG noted that consumer finance trends favor Affirm, as credit card providers reduce risk in light of worsening credit conditions. Alternative lenders like Affirm stand to gain market share.

Regulatory Impact

Changes such as the Consumer Financial Protection Bureau’s new late-fee rule are anticipated to make credit cards less appealing. This could lead more merchants and consumers toward BNPL products.

Price Target

The upgrade sets a price target of $68 for Affirm’s stock, based on a 29.1x multiple of its projected fiscal 2025 operating earnings per share. Analysts attribute this optimistic outlook to Affirm’s rapid GMV growth and expanding margins.

Retail Expansion

Affirm continues to expand its presence in the market, partnering with major retailers like Walmart (NYSE:WMT) to offer BNPL options to their customers.