2023-06-23 10:02:23 ET
Compass Point initiated Affirm Holdings ( NASDAQ: AFRM ) at Neutral, given the stock's premium valuation and lack of growth re-acceleration visibility.
"AFRM is the leader in the Buy now, pay later sector with $19.1B of gross merchandise volume and the most diverse suite of BPNL offerings," said analyst Giuliano Bologna. "AFRM's loans also have attractive unit economics that has the potential to scale and leverage its cost base over time."
But high interest rates have driven funding costs higher than loan yield and volatile capital markets have dragged AFRM's revenue less transaction fees as a percentage of GMV.
"Despite AFRM's dominant position in a high-growth market with attractive/scalable unit economics, its current valuation keeps us on the sidelines for now," said Bologna.
Price target was set at $14.50, implying 2.6% potential downside to AFRM's last close. Shares of Affirm ( AFRM ), which gained 62.2% YTD, slipped 1.3% in morning trade.
Compass Point's views are in line with Hold ratings from SA Quant and Wall Street analysts .
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Compass Point initiates Affirm at Neutral on premium valuation