Analysts View the Dip as a Buying Opportunity

Shares in Affirm, the popular fintech company, experienced a significant rally ahead of its quarterly results release on Thursday. However, despite a decrease in stock value on Friday morning, experts believe the decline is exaggerated and may present an ideal buying opportunity.

Affirm witnessed a noteworthy surge of 10.3% in shares on Thursday, which was followed by an 8.5% dip during premarket trading on Friday after the company reported its fiscal second-quarter results. Surpassing expectations, Affirm announced a loss of 54 cents per share on revenue of $591 million. In comparison, analysts surveyed by FactSet had estimated a loss of 72 cents per share on revenue of $521 million.

The standout highlight was Affirm's gross merchandise value (GMV), a metric that accounts for the total value of transactions conducted through the platform. The company's GMV for the quarter stood at an impressive $7.5 billion, surpassing analyst projections of $6.9 billion. Furthermore, Affirm revised its GMV outlook for fiscal year 2024 to $25.25 billion, marking a substantial $1 billion increase from its previous forecast.

Despite these promising figures, investors witnessed an unexpected decline in Affirm stock. Mizuho analyst Dan Dolev attributed this reaction to a knee-jerk response, noting that the increase of $1 billion in GMV guidance for the fiscal year suggests a potential deceleration in growth during the second half of the year.

Despite this momentary setback, Affirm stock has already seen impressive growth, surging over 250% in the past year. Analysts encourage investors to view this decline as a buying opportunity and remain optimistic about Affirm's future prospects.

Affirm Stock's Potential for Recovery

Analysts maintain an optimistic outlook on Affirm Holdings Inc. stock following its soft guidance for gross merchandise volume (GMV). Despite a projected slowdown, experts believe the company's history of outperforming expectations indicates that it can exceed its projections.

Dolev, a leading analyst, reaffirmed his Buy rating on the stock and maintained a price target of $65. While acknowledging some conservatism in the market, he views the current situation as a buying opportunity, anticipating a potential recovery in the stock's value. On Thursday, the shares closed above $49.

Supporting this perspective, Smith from J.P. Morgan notes that despite the soft outlook, Affirm has a record of surpassing expectations. Smith is raising estimates slightly above guidance and adjusting the price target to $41 (previously $35). Although remaining Neutral on valuation, he suggests a more positive stance in the event of a pullback.

Affirm's management has positioned its GMV guidance as a floor, leading analysts to maintain a positive outlook on growth until June. Jeffrey from Truist echoes this sentiment, expressing surprise if there were to be any significant slowdown in light of the company's broadening momentum and strong consumer engagement. Jeffrey reiterates his Buy rating and proposes a $60 price target, emphasizing Affirm's potential as a transformative player in the buy-now-pay-later market. He believes investors will be willing to pay a premium for its unique position.

As these experts maintain their positive outlook on Affirm Holdings Inc., it remains to be seen if the stock market will align with their perspective.

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