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Affirm (AFRM) Stock Soars on Favorable Goldman Sachs Rating

Shares of Affirm Holdings, Inc. AFRM surged 12.8% on Monday following Goldman Sachs' initiation of coverage with a Buy rating. Analysts highlighted the buy now, pay later (BNPL) service provider's innovative credit solutions, superior underwriting processes and effective risk management, which includes short-term receivables and transaction-level underwriting, as key factors for their positive outlook.

Also, Goldman Sachs set a $42 price target for the stock, which indicates a 40.6% premium on the $29.87 closing price on Friday. The company’s ability to achieve robust credit outcomes while growing at a faster rate than its peers impressed the analysts. Moreover, its expanding distribution network is likely to support its sustainable GMV growth.

What Do We Think About the Stock?

The Zacks Consensus Estimate for AFRM’s current-year earnings indicates a 40.7% year-over-year improvement. The stock has witnessed five upward estimate revisions in the past 60 days against none in the opposite direction. It beat on earnings in two of the last four quarters and missed twice. This is depicted in the graph below.

Affirm Holdings, Inc. Price and EPS Surprise

Affirm Holdings, Inc. Price and EPS Surprise
Affirm Holdings, Inc. Price and EPS Surprise

Affirm Holdings, Inc. price-eps-surprise | Affirm Holdings, Inc. Quote

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Furthermore, the Zacks Consensus Estimate for current-year revenues is pegged at nearly $2.3 billion, suggesting a 42.6% rise from the prior year’s reported figure. Increasing GMV and transaction volumes will likely support the top-line growth. Several other factors, like AFRM expected to look for opportunities beyond U.S. retail and Apple ditching BNPL services in the United States, are major tailwinds for the stock.

Zacks Rank & Other Key Picks

Affirm currently has a Zacks Rank #2 (Buy).

Investors interested in the broader Business Services space can look at some other top-ranked stocks like Global Payments Inc. GPN, Paysafe Limited PSFE and Fiserv, Inc. FI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Global Payments’ 2024 earnings is currently pegged at $11.64 per share, indicating 11.7% year-over-year growth. It beat estimates in each of the past four quarters with an average surprise of 1.1%. The consensus mark for GPN’s revenues of $9.2 billion suggests a 6.4% increase from the year-ago level.

The Zacks Consensus Estimate for Paysafe’s current-year earnings is now pegged at $2.47 per share, indicating 6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 18.3%. The consensus mark for PSFE’s revenues of $1.7 billion suggests a 6.5% increase from the year-ago level.

The Zacks Consensus Estimate for Fiserv’s 2024 earnings of $8.69 per share suggests 15.6% year-over-year growth. It beat earnings estimates thrice in the past four quarters and met once, with an average surprise of 2.3%. The consensus estimate for FI’s current year revenues is pegged at $19.3 billion, indicating a 7.2% increase from a year ago.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Global Payments Inc. (GPN) : Free Stock Analysis Report

Fiserv, Inc. (FI) : Free Stock Analysis Report

Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report

Paysafe Limited (PSFE) : Free Stock Analysis Report

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