Shares of BNPL Provider Affirm Surge in Pre-Open Trade Following Analyst Upgrade

Shares of Affirm Holdings saw a 5.2% increase in pre-open trading following an upgrade from BTIG analysts, who changed their rating from “neutral” to “buy.” The analysts highlighted the company’s path toward GAAP profitability and its growing market share in point-of-sale financing as key factors behind the upgrade.

BTIG pointed out that Affirm’s operating income margin for fiscal 2025 is projected to reach 19%, making it competitive with American Express, which has a margin of 20%. Analysts expressed optimism regarding Affirm’s ability to exceed this target, as guidance indicates potential for lower expense growth.

Additionally, the analysts noted Affirm’s expanding share in point-of-sale finance, a trend they expect to accelerate due to macroeconomic factors, including increasing credit losses experienced by traditional credit card companies like American Express.

Affirm, which specializes in buy-now-pay-later solutions, has witnessed significant growth in its gross merchandise volume (GMV), benefitting from enhanced merchant collaboration and consumer interest. The analysts anticipated a 30% year-over-year growth in GMV for fiscal 2025, outpacing conventional credit card issuers.

BTIG emphasized the favorable consumer finance landscape for Affirm, noting that many credit card providers are scaling back in light of deteriorating credit conditions. This environment positions alternative lenders like Affirm to gain market share. Furthermore, regulatory changes, such as the recently introduced late-fee rule, are likely to make credit cards less appealing, potentially steering more merchants and consumers towards buy-now-pay-later options.

The upgrade set a price target of $68 for Affirm’s stock, calculated using a 29.1x multiple of its projected operating earnings per share for fiscal 2025. Analysts pointed to Affirm’s rapid GMV growth and improving margins as crucial elements driving their positive outlook.

This optimism aligns with Affirm’s ongoing expansion efforts, which include partnerships with major retailers that offer Affirm’s buy-now-pay-later options to their customers.