On Tuesday, Morgan Stanley maintained its Underweight rating on Affirm Holdings Inc. (NASDAQ:AFRM) with a steady price target of $20.00. The firm's stance comes amid expectations of a notable rise in Gross Merchandise Volume (GMV), which is anticipated to be considerable. However, concerns are growing regarding the continuous sequential growth in delinquencies, casting doubt on the sustainability of GMV expansion over the medium term.
The analyst at Morgan Stanley expressed reservations about the company's valuation, suggesting that the current price levels are difficult to justify. The commentary highlighted the tension between the potential for increased GMV and the implications of rising delinquencies on the company's future performance.
Affirm Holdings, a financial technology company known for its buy now, pay later services, has been under scrutiny as analysts evaluate the impact of consumer credit behavior on its business model. The analyst's remarks underscore the cautious outlook on the stock, given the potential challenges it may face.
The company's stock performance will continue to be watched closely by investors, as market participants weigh the prospects of growth against the risks highlighted by Morgan Stanley. The affirmation of the $20.00 price target reflects the firm's current assessment of Affirm's market position and financial health.
InvestingPro Insights
Investors tracking Affirm Holdings Inc. (NASDAQ:AFRM) should be aware of the stock's high price volatility, a characteristic that has persisted over time. This volatility is exemplified by the stock's significant price movements, which have been noted by analysts. In addition, while the company has seen a strong return over the last three months, with a 91.39% price total return, and an impressive 144.27% return over the last year, analysts remain cautious as they do not anticipate the company to be profitable this year.
InvestingPro data shows that Affirm's market cap stands at $12.72B, with a negative P/E ratio of -13.54, reflecting the company's current lack of profitability. The revenue for the last twelve months as of Q1 2024 is reported at $1722.91M, demonstrating a healthy growth of 19.52%. However, this growth is juxtaposed with a substantial operating loss of -$1082.26M, emphasizing the challenges the company faces in achieving profitability.
For those who are considering investing in Affirm Holdings, it's worth noting that the company trades at a high Price / Book multiple of 4.97, which may be of interest to investors looking for growth potential in their portfolio. The InvestingPro Tips also highlight that Affirm's liquid assets exceed its short-term obligations, which could be a sign of financial stability despite the company not paying a dividend to shareholders.
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