On Friday, Mizuho Securities maintained its optimistic stance on Affirm Holdings Inc. (NASDAQ:AFRM), reiterating an Outperform rating with a steady price target of $65.00. The firm anticipates that lower interest rates could significantly benefit the company's gross merchandise volume (GMV) by 30-35% above the consensus for the fiscal year 2027. This growth is expected as Affirm expands its credit offerings to a wider customer base.
The analyst from Mizuho highlighted the potential for Affirm to achieve considerable operating leverage, which could result in a GAAP earnings per share (EPS) that is two to three times higher than the consensus estimates of approximately $1.00. In a scenario where Affirm reaches this level of earnings, the company's stock could be valued at 17-18 times its fiscal year 2027 GAAP price-to-earnings (P/E) ratio.
This valuation would be lower than that of Visa (NYSE:V), which trades at approximately 20 times earnings, despite Affirm's projected top-line growth being three to four times faster at 35-40% compared to Visa's estimated 10%.
The financial technology company, known for its buy now, pay later services, is positioned to capitalize on the trend of expanding credit access to a broader range of consumers. The analyst's comments suggest confidence in Affirm's ability to scale its business and enhance profitability over the next few years.
Affirm's potential to outperform market expectations and trade at a P/E ratio below that of established players like Visa underscores the growth trajectory envisioned by Mizuho. The firm's analysis indicates that Affirm's stock holds significant promise for investors based on the projected financial performance.
The price target set by Mizuho at $65.00 reflects the firm's assessment of Affirm's future financial success and market position. As of the last trading session, Affirm Holdings Inc.'s stock price will be gauged against this target as the company continues to navigate the competitive financial technology landscape.
In other recent news, Affirm Holdings Inc. has been the focus of several analyst firms. Mizuho maintained an Outperform rating, projecting a considerable growth potential due to the company's strategy to expand its credit offerings. This, combined with operational leverage, could lead to a GAAP earnings per share scenario two to three times higher than current consensus estimates.
Barclays reiterated its Overweight rating following Affirm's integration with Apple (NASDAQ:AAPL) Pay, a development that could expand the company's reach among iPhone users. Goldman Sachs maintained a Buy rating, recognizing Affirm's robust financial performance and commitment to achieve GAAP profitability by the fourth quarter of 2025. JPMorgan raised its stock target while retaining an Overweight rating, encouraged by Affirm's notable revenue growth.
These recent developments also include a strategic partnership with Apple Pay, offering flexible payment options to U.S. customers. Key leadership changes have been announced, with CFO Michael Linford expanding his role to Chief Operating Officer and Rob O'Hare stepping in as the new CFO. Affirm's strategy for fiscal 2025 includes maintaining a 30% growth in Gross Merchandise Volume while moderating operating expenses growth.
InvestingPro Insights
As Mizuho Securities maintains a positive outlook on Affirm Holdings Inc. (NASDAQ:AFRM), recent data and insights from InvestingPro further inform investors about the company's current market position. Affirm's market capitalization stands at $13.99 billion, reflecting the size and scale of the company within the financial technology sector. Despite the company's growth, analysts from InvestingPro note that Affirm is not expected to be profitable this year, which aligns with the long-term growth perspective outlined by Mizuho Securities.
InvestingPro data shows a significant revenue growth of 46.29% over the last twelve months as of Q4 2024, indicating a strong upward trend in the company's financial performance. This is further supported by a robust gross profit margin of 42.81%, showcasing Affirm's ability to maintain profitability at the core of its operations. Additionally, the stock has experienced a strong return over the last three months, with a 46.91% price total return, emphasizing the positive momentum that may interest potential investors.
InvestingPro Tips highlight that Affirm trades with high price volatility, which suggests that investors should be prepared for potential fluctuations in stock price. Moreover, the company's liquid assets exceeding short-term obligations provide a measure of financial stability. For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available, which can be accessed for Affirm Holdings Inc. at InvestingPro.
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