Analysts have issued a mixed opinion on Affirm Holdings, Inc. AFRM after the third quarter results. Swiss credit analyst Timothy Chiodo held neutral and lowered the price target from $85 to $36.
FQ3 GMV beat the high-end forecast by 6%; non-Peloton growth was 97%. Affirm extended the Shopify Inc. STORE exclusive agreement through June 8, 2025, and that Affirm would add interest-bearing product during the fourth quarter.
Chiodo continues to believe that Affirm is well positioned with many of the most critical e-commerce platforms/retailers in the United States (Amazon.com Inc. AMZNShopify, Walmart Inc. WMT, Target company TGT, Expedia Group, Inc. EXPEetc.), which will reinforce the network effects of Affirm (additional merchants and users).
Barclays analyst Ramsey El-Assal had an overweight rating with a price target of $65. AFRM beat Street estimates across the board, especially gross profit (RLTC).
Additionally, the company ended some lingering bearish themes and reported breakeven profitability earlier than investors expected. The company also announced a multi-year renewal of the SHOP relationship.
RBC Capital Analyst Daniel Perlin maintained outperformance and lowered the price target from $58 to $48. AFRM delivered strong Q3 2022 results in an otherwise challenging market and raised its FY22 guidance, which proved to be a rare occurrence in this earnings season.
Specifically, GMV is ~7% higher than Perlin’s forecast and in line with revenue growth (~7%), while revenue minus transaction expenses exceeded our estimate of $39 million or about 27%.
Importantly, management highlighted a plan to achieve a “sustained” adjustment. operating profit profitability, on a current basis, by the end of FY23, demonstrating the breadth of its business model and management’s drive to achieve profitability.
Mizuho analyst Dan Dolev reiterated a buy with a price target of $79. After a lot of anxiety, good F3Q results should offer a big sigh of relief.
Dolev expects a very positive stock market reaction. Following a precipitous rise in the guide in March after the failure of the ABS bid, the F3Q results exceeded expectations, with a higher FY guide on all important fronts.
Key KPIs were strong, including increasing overall acceptance rates and halting in year 2+ the decline of the most qualified borrowers in the mix. Small nuances like increasing charges and changing offending targets can raise questions on the call.
Although Dolev has been increasingly bullish on Affirm and the partnership with Amazon, the multiple reflects the recent double-digit decline in payments/fintech multiples and the growing risk of further chargebacks and chargebacks.
Price action: AFRM shares traded up 24.5% at $22.46 when last checked on Friday.