Analysts dive into financial results

Claiming Holdings liquidation ‘disconcerting’: Analysts dive into financial results

Actions of Affirm Holdings Inc. (NASDAQ:AFRM) rose in early trading Thursday after falling more than 9% on Wednesday after the company reported its fiscal third quarter results.

The results came amid a exciting earnings season. Here are some key takeaways from analysts.

JPMorgan on affirming holdings

Analyst Reginald Smith upgraded the rating from Neutral to Overweight while also increasing the price target from $41 to $43.

The sharp decline in Affirm shares on Wednesday, despite the company posting another headline and beating operating margin and announcing a better-than-feared GMV outlook for the fiscal fourth quarter, “was disconcerting,” Smith said in a note. Affirm Card’s active cardholders surpassed the one million mark, up from 700,000 in the previous quarter, he added.

Pay Now is increasing as a percentage of card GMV, “which could be a sign of progress towards becoming a top wallet card,” the analyst wrote. “In light of recent strong performance, Affirm is beginning to open up its risk avenue, which includes offering better credits, lower APRs to drive incremental GMV growth, as well as expanding its credit pool at margin,” he added.

Goldman Sachs on asserting holdings

Analyst Michael Ng reiterated a Neutral rating while raising the price target to $21 from $20.

Affirm raised its full-year GMV guidance, “driven by superior performance in the quarter and continued momentum in the business,” Ng said. GMV growth accelerated for the fourth consecutive quarter to 36% year-on-year, with volumes from the company’s top five merchants growing faster than the overall business, it added.

Affirm Card generated GMV of $374 million in the fiscal third quarter, “which currently has more than 1 million active cardholders,” the analyst wrote. “The Affirm Card has been heavily utilized in categories that AFRM has historically not addressed (e.g. restaurants, groceries, gas),” he added.

check out other analyst stock ratings.

Mizuho Securities On Affirm Holdings

Analyst Dan Dolev reaffirmed a Buy rating and $65 price target.

The decline in Affirm shares, following “a fantastic F3Q” with upbeat GMV and outlook, is likely in line with Shopify Inc. (NASDAQ:PURCHASE) shares, which fell due to “soft guidance and operating expense concerns,” Dolev said.

The reaction seems “over the top,” as Shopify only accounts for about 10% of Affirm’s gross merchandise value, versus about 20% of Amazon.com (NASDAQ:AMZN), says the analyst. “We believe the initial post-earnings upward movement in the stock is more appropriate for AFRM and recommend buying based on the strength of the fundamentals versus the knee-jerk negative reaction of the stock,” he added.

The story continues

Needham on asserting holdings

Analyst Kyle Peterson maintained a Hold rating on the stock.

Affirm reported its quarterly results above Street expectations, “although most of the upside was due to loan-related income (interest, gain on sale, servicing), which we believe warrants a lower valuation from investors compared to network revenue,” Peterson wrote in a note. He added that the company’s provision for credit losses has increased both sequentially and year-over-year.

“Although defaults remain stable, we expect some increase in anxiety in response to the higher provision, given the current stage of the credit cycle,” the analyst further stated.

AFRM Price Action: Shares of Affirm Holdings were up 4.6% at $33.06 at press time on Thursday.

Now read: Jobless claims rise more than expected, hit 8-month high: Dollar falls as traders bet on rate cuts

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