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JPMorgan Sees 36% Upside for Affirm, Upgrades to Overweight

JPMorgan upgrades Affirm to overweight, sees 36% upside after stock plunges 9.5% post-earnings.

By Alex P. Chase

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5/9, 09:49 EDT
Apple Inc.
Airbnb, Inc.
Affirm Holdings, Inc.
Costco Wholesale Corporation
Fox Corporation
SolarEdge Technologies, Inc.
Shopify Inc.
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Key Takeaway

  • JPMorgan upgrades Affirm Holdings to overweight with a $43 price target, seeing a 36% upside after a 9.5% post-earnings sell-off.
  • Affirm's Q3 revenue of $576 million beats forecasts, despite market reaction influenced by external factors like Shopify's decline.
  • Analyst optimism extends beyond BNPL, with bullish calls on tech and travel sectors indicating strong growth prospects across various industries.

Analyst Upgrade Sparks Interest

JPMorgan analyst Reginald Smith upgraded Affirm Holdings Inc. to overweight from neutral, signaling a positive shift in the investment bank's outlook on the buy-now-pay-later (BNPL) company. This upgrade comes in the wake of Affirm's stock experiencing a significant sell-off, dropping 9.5% following its latest earnings report. Despite this, Smith sees the sell-off as an opportunity, raising his price target for Affirm to $43, which suggests a 36% upside from Wednesday's close. This optimistic stance is encapsulated in Smith's message to clients: "not letting a good sell off go to waste."

Earnings Overview and Market Reaction

Affirm reported a fiscal third-quarter revenue of $576 million, surpassing the consensus forecast of $550 million by analysts polled by FactSet. The company also provided strong guidance for the current quarter in terms of revenue and gross merchandise volume. However, the positive earnings report was overshadowed by a significant drop in share price, which Smith attributes to factors external to Affirm's performance. Notably, a decline in business partner Shopify's stock by over 18% due to management commentary on revenue growth headwinds and a Bloomberg report discussing the lack of disclosure around consumer debt on delayed payment platforms contributed to the negative market reaction.

Sector and Analyst Movements

The broader financial sector and technology updates reveal a flurry of analyst ratings and market movements. Goldman Sachs and JPMorgan have made bullish calls on companies like Sunrun and SolarEdge, while Affirm's recent dip has led to its upgrade. Other companies such as Arm Holdings and Airbnb have also seen positive adjustments based on their growth prospects. The tech and travel sectors, in particular, are highlighted for their strong fiscal results and potential for future growth. Additionally, upgrades in various sectors, including media, entertainment, and consumer goods, reflect a dynamic market environment with Apple, Costco, and Fox receiving notable mentions for their potential earnings acceleration and growth in services revenue.

Street Views

  • Reginald Smith, JPMorgan (Bullish on Affirm Holdings Inc):

    "Not letting a good sell off go to waste."