SHOP - Affirm's Growth Prospects Tempered by Valuation and Expense Hurdles: Analyst | Benzinga
Needham analyst Kyle Peterson initiated coverage on Affirm Holdings Inc (NASDAQ:AFRM) with a Hold rating.
Affirm is a leading provider of “buy now, pay later” (BNPL) services, with a broad range of product offerings and notable partnerships, most notably with Amazon.Com Inc (NASDAQ:AMZN) and Shopify Inc (NYSE:SHOP), the analyst noted.
While Peterson flagged Affirm’s diverse product suite and expects the market for BNPL services to generate healthy growth, he rated the stock Hold due to a combination of valuation (~32x his fiscal 2026 EPS estimate), elevated stock-based compensation expense (46% of LTM revenue), and a growing mix share of interest and other lending-related income (~65% of revenue), which he expect to make significant multiple expansion challenging.
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Peterson could become more constructive on the shares in case of a pull-back or if merchant and card network revenue growth becomes a larger piece of the story.
The analyst noted Affirm ...