On Friday, RBC Capital maintained its Sector Perform rating on Affirm Holdings Inc. (NASDAQ:AFRM) with a steady price target of $43.00. The firm's analysis followed investor meetings with Affirm's Chief Revenue Officer and Head of Investor Relations, which concentrated on the company's growth prospects, the introduction of the Affirm Card, the regulatory landscape, and efforts to achieve profitability.
The discussions with Affirm's executives revealed a focus on sustaining growth in a challenging market. Affirm, which operates in the Buy Now, Pay Later (BNPL) sector, has been affected by a wider sell-off in BNPL stocks. Despite these market conditions, RBC Capital has chosen not to adjust its current price target for the company.
RBC Capital also addressed the regulatory environment surrounding the BNPL industry. As companies like Affirm navigate this space, analysts are closely monitoring the potential impacts of regulatory changes on their business models and market positions.
In addition, the firm expressed confidence in Affirm's strategic direction toward profitability. This comes at a time when financial technology companies are under increased scrutiny regarding their long-term financial sustainability and profitability paths.
RBC Capital did, however, lower its downside valuation for Affirm to $25 from the previous $30. This adjustment is approximately 3 times the firm's downside CY25 revenue estimate of $2.69 billion, which is 10% below their current estimate and reflects a half-point reduction in multiple.
This new downside valuation provides a perspective on the potential lower boundary for the stock's value, considering the current market dynamics.
InvestingPro Insights
Recent data from InvestingPro highlights some key metrics for Affirm Holdings Inc. (NASDAQ:AFRM) that may interest investors. The company's market capitalization stands at approximately $9.17 billion, reflecting its scale in the competitive Buy Now, Pay Later (BNPL) market. Despite the challenges faced by the sector, Affirm has demonstrated robust revenue growth, with an impressive 40.05% increase over the last twelve months as of Q3 2024. This growth momentum is further underscored by a quarterly revenue growth of 51.23% in Q3 2024.
However, investors should be aware of Affirm's profitability challenges. The company has not been profitable over the last twelve months, with an operating income margin of -36.75% and an EBITDA growth of 45.24%, indicating ongoing investments and expenses. The stock's price volatility is also noteworthy, with significant price fluctuations over the last three months, including a 19.74% drop, although it has seen a high return over the last year at 107.55%. This could be indicative of the stock's high-risk, high-reward nature.
For those looking to delve deeper, there are additional InvestingPro Tips available, such as analysts' upward earnings revisions for the upcoming period and the company's liquidity position, with liquid assets exceeding short-term obligations. These insights can be further explored at InvestingPro's dedicated page for Affirm: https://www.investing.com/pro/AFRM. Additionally, users can apply the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 10 InvestingPro Tips for Affirm Holdings Inc.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.