Affirm Holdings (NASDAQ:AFRM) gained nearly 6% in pre-open trading Tuesday after Mizuho analysts raised their price target on the stock, highlighting that the company's hybrid pay now, BNPL debit card is "gaining traction."
"Google Trends search data for AFRM's Debit+ (a hybrid pay now, BNPL debit card) is promising," they commented. "In our view, the uptick in Debit+ searches is reminiscent of the 'buzz' that engulfed Square's Cash Card in its early days (2017)."
As a result, the analysts raised their price target to $20 from $17, suggesting 35% upside from Monday's closing price.
They highlight that the recently launched Debit+ card is a debit card that allows customers to utilize pay now and pay over time at the point of sale in conjunction with the Affirm app.
"In our view, Debit+ is innovative as it expands where consumers can use AFRM: online, offline, and in electronic wallets," the analysts commented.
Analyzing Google Trends shows an ample increase in interest level in Debit+ since March 2023, they note.
"The 'buzz' surrounding Debit+ is reminiscent of the boost in searches that engulfed Square's Cash Card in its early days (2017)," the analysts added. "Since then, SQ's Cash Card saw about ~150% gross profit CAGR, reaching ~20mn MAUs and a ~$1bn GP run-rate as of 1Q23."
Mizuho analysts see the potential for ~250% volume CAGR from Debit+ through FY26. They said this can drive up total GMV CAGR from about 20-25% to about 30-35% with a boost to RLTC from mid-20%s close to 30%.