4 Affirm Holdings Analysts Offer Takes On Quarter: Company Having 'Economic And Credit Cycle Turbulence'

Zinger Key Points
  • The downturn in Affirm Holdings's shares is a "knee-jerk reaction," one analyst said.
  • However, another analyst added that there could be more downside as GMV growth decelerates.

Affirm Holdings Inc AFRM reported $364.1 million in sales for its fiscal fourth quarter, beating the consensus estimate of $355 million in sales. The company, meanwhile, reported a loss of 65 cents per share, significantly worse than Street expectations of a loss of 58 cents per share.

Morgan Stanley On Affirm Holdings

Analyst James Faucette reaffirmed an Overweight rating and a price target of $80.

The company has been witnessing “economic and credit cycle turbulence, even if those forces are having a modest adverse impact on near-term growth trajectory,” Faucette said in a note.

“Beyond the market-related challenges, another hurdle for investors will likely remain the relative difficulty in forecasting the business, and anticipating the impact of mix,” he added.

Mizuho Securities On Affirm Holdings

Analyst Dan Dolev reiterated a Buy rating and a price target of $50.

“F4Q was undoubtedly well ahead of the guide including: $4.4bn in GMV (vs. $3.95-4.05) and $184mn of rev. less transactions costs (vs. $160-165mn),” Dolev wrote in a note.

Heading into the fiscal fourth quarter, the most important KPI is “revenue less transaction cost as a % of GMV,” the analyst stated. “Here, although AFRM guided above the buy-side bogey (3.7% vs. 3.5%) the negative knee-jerk reaction (-14% after hours) is due to weaker than expected GMV guide, and rising charge-offs,” he mentioned.

“We believe GMV guide may simply prove conservative, and expect the decline in the stock to abate,” Dolev added.

Check out other analyst stock ratings.

RBC Capital Markets On Affirm Holdings

Analyst Daniel Perlin maintained an Outperform rating, while reducing the price target from $48 to $40.

“Parsing out the difference between cautiously optimistic or just cautious, we believe management is the former, with a conservative jumping-off point in FQ1/23, with results likely to build momentum into FH2/23 as Peloton and other difficult comps ease, and AFRM's strong product roadmap, which could be led by Debit+,” Perlin said.

Management reiterating plans to achieve “sustained” adjusted operating income profitability by yearend fiscal 2023 reflects “both the scale of its business model and management’s willingness to achieve profitability,” he added.

Stephens On Affirm Holdings

Analyst Vincent Caintic reiterated an Underweight rating and a price target of $18.

The earnings call indicated that “GMV upside is limited due to consumer weakness,” Caintic mentioned. “Additionally, credit deteriorated further,” with a rise in delinquencies in the quarter and further acceleration through the ongoing quarter, he noted.

“We think volumes and margins will be constrained further by credit performance,” the analyst wrote. “While management expressed long-term bullishness on Affirm, we don't think shares will work as GMV growth decelerates, margins compress and credit metrics worsen,” he added.

AFRM Price Action: Shares of Affirm Holdings had tanked by 20.59% to $24.80 at the time of publication Friday.

Photo: T. Schneider via Shutterstock

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading IdeasDan DolevDaniel PerlinJames FaucetteMizuho SecuritiesMorgan StanleyRBC Capital MarketsStephensVincent Caintic
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