Morgan Stanley Upgrades Affirm Amid Price Decline
Written by Emily J. Thompson, Senior Investment Analyst
0mins
Should l Buy AFRM?
Source: Newsfilter
Affirm Holdings Inc's stock has dropped 4.31% and hit a 20-day low, reflecting broader market weakness as the Nasdaq-100 fell 2.42% and the S&P 500 declined 1.01%.
Morgan Stanley analyst James Faucette noted that Affirm's stock has decreased over 16% year-to-date, presenting a 'compelling' investment opportunity. The firm upgraded Affirm's rating from 'Equal Weight' to 'Overweight' with a revised price target of $76, down from $83, indicating confidence in the company's growth potential despite current market challenges. Analysts expect Affirm to generate $1.05 billion in revenue and an earnings per share of $0.84 for Q2 fiscal 2026, showcasing ongoing growth in its payments platform business.
The upgrade from Morgan Stanley may provide a boost to investor sentiment, as the company continues to expand its partnerships and enhance its payment solutions, positioning itself for future growth in the competitive fintech landscape.
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Analyst Views on AFRM
Wall Street analysts forecast AFRM stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AFRM is 95.50 USD with a low forecast of 83.00 USD and a high forecast of 114.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
18 Analyst Rating
12 Buy
6 Hold
0 Sell
Moderate Buy
Current: 59.420
Low
83.00
Averages
95.50
High
114.00
Current: 59.420
Low
83.00
Averages
95.50
High
114.00
About AFRM
Affirm Holdings, Inc. provides consumers with an alternative to traditional payment options. The Company is engaged in building a payment network. Its platform comprises three core elements: point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer-focused app. Its Affirm App and Website provide tailored offers from merchants based on consumers' preferences. Consumers can apply at affirm.com or via the Affirm App and, upon approval, receive a single-use virtual card to use online or in-store. Its Affirm Card allows consumers to link a bank account to pay in full, or apply to pay overtime through the Affirm App. It offers users an in-app post-purchase feature that allows them to instantly apply to convert any eligible debit transaction into an installment loan. Through the Affirm app and in partnership with Cross River Bank, it offers a savings account, with no minimum deposit requirements or fees.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Analyst Rating Changes: JPMorgan analyst Reginald Smith maintained an Overweight rating on Affirm but reduced the price target from $94 to $79, reflecting a cautious outlook on future growth.
- Market Reaction: Affirm's shares fell 1.26% to $59.42 in premarket trading on Friday, indicating investor concerns regarding the company's slowing growth trajectory.
See More
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- Significant Revenue Growth: The company posted revenue of $1.12 billion, exceeding the expected $1.05 billion, demonstrating strong business expansion and market demand, which is likely to drive stock price appreciation.
- Customer and Merchant Growth: Active customers increased by 23% to 25.8 million, while active merchants rose by 42% to 478,000, showcasing Affirm's competitive edge and appeal in the market, potentially laying the groundwork for future revenue growth.
- Guidance Upgrade: Affirm raised its fiscal year 2026 revenue guidance to between $4.08 billion and $4.14 billion, reflecting confidence in future performance, which may enhance market sentiment towards its stock.
See More
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- Stock Performance: Affirm Holdings' stock declined on Friday despite reporting strong fiscal second-quarter earnings.
- Analyst Opinions: Some analysts believe the market reaction to the earnings report is unjustified.
See More
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- Earnings Beat: Affirm reported Q2 2026 earnings of $0.37 per share, surpassing the consensus estimate of $0.30, indicating improved profitability that may boost investor confidence.
- Revenue Growth: The company achieved quarterly revenue of $1.12 billion, exceeding Wall Street's expectation of $1.06 billion, reflecting strong market demand that supports future business expansion.
- Strategic Partnership: Affirm's collaboration with Virgin Media O2 introduces transparent and flexible hardware financing options for O2 customers, enhancing O2's competitiveness in the SIM-free market, which is expected to attract more customers and increase sales.
- Positive Outlook: Affirm anticipates Q3 revenue between $970 million and $1 billion, and Q4 between $1.060 billion and $1.090 billion, while raising its FY26 revenue guidance to $4.09 billion to $4.15 billion, demonstrating confidence in future growth.
See More
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- Trump's Drug Price Website: President Trump announced the launch of a new website aimed at lowering drug prices, which will provide consumers access to more affordable prescription medications, potentially impacting pricing strategies in the pharmaceutical industry and raising public awareness about drug accessibility.
- Jobs Report Delayed: The January jobs report, originally scheduled for release today, has been postponed to next Wednesday due to the partial government shutdown earlier this week, which may affect short-term market expectations regarding economic health and increase investor uncertainty.
- Stable Treasury Yields: The 10-year Treasury bond yield stood at 4.20%, while the two-year bond yield was at 3.48%, reflecting market expectations of unchanged interest rates; the CME Group's FedWatch tool indicates an 81.3% likelihood of this, which could influence investors' asset allocation strategies.
See More
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- Partnership Announcement: Affirm has partnered with Virgin Media O2, one of the UK's leading mobile providers, to offer transparent and flexible hardware financing options, enhancing customer experience for both new and existing users when purchasing devices.
- No Hidden Fees: Affirm's financing options cover mobile phones, headphones, and gaming consoles, ensuring customers are not charged late or hidden fees when repaying their loans, which enhances payment transparency and builds trust with consumers.
- Market Expansion Potential: This partnership allows Virgin Media O2 to expand its offerings in the SIM-free market, adding to its existing portfolio of Pay Monthly Handset Bundles and SIM Only options, thereby increasing its competitive edge in the market.
- Future Development Plans: Flexible payment plans are expected to be available to Virgin Media O2 customers later this summer, pending regulatory approval, which will help improve payment convenience for customers and enhance the company's market influence.
See More
