Affirm Holdings Inc.’s inventory had run up about 125% within the three months earlier than its newest earnings report. That type of rally helped set the bar “too high,” in line with an analyst.
Thus, whereas Affirm
beat expectations with its fiscal second-quarter outcomes Thursday, Wall Street was maybe disenchanted by an outlook for the second half of the fiscal yr that implied slowing development on income, adjusted working earnings and gross merchandise quantity, wrote Piper Sandler’s Kevin Barker.
“This guide is likely to reset margin expectations and put some near-term pressure on the stock,” he mentioned, whereas protecting his underweight ranking on the inventory however upping his goal worth to $19 from $14.
Affirm shares had been falling greater than 13% in Friday motion.
Wells Fargo’s Andrew Bauch mentioned the December-quarter report contained fodder for either side.
“We suspect bullish investors remain emboldened by [Affirm’s] stellar execution in recent prints,” he wrote. “That said, while we believe bears may likely concede on that front, they may point to elevated valuation levels proving too difficult to own shares.”
From his standpoint, valuation debates on Affirm are “fruitless,” as the corporate has no true publicly traded peer.
“While unsatisfying, shares are subject to market momentum,” wrote Bauch, who caught with an equal-weight ranking however doubled his worth goal to $40.
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Still, from the bear camp, Morgan Stanley’s James Faucette was attempting to make a case that the inventory appeared overvalued. He mentioned that the corporate’s “rate of improvement doesn’t justify valuation.”
“We continue to believe that valuation is stretched and remain focused on [Affirm’s] ability to close the monetization gap with [Capital One] while accelerating margin expansion and maintaining revenue growth, a combination which may prove challenging,” he mentioned.
Faucette has an underweight ranking and a $20 goal worth on the inventory.
Mizuho’s Dan Dolev, in the meantime, mentioned that Friday’s selloff might show to be a shopping for alternative. He deemed the corporate’s outlook “easily” achievable.
He values Affirm at 8 occasions estimated income for calendar 2025, whereas the inventory is at the moment buying and selling at a “mid-6x” a number of on that metric.
“We continue to believe that [Affirm] is one of the most innovative names in our coverage universe and therefore the ~2-turn premium is deemed appropriate,” he wrote.
Dolev charges Affirm shares a purchase with a $65 goal worth.