Affirm stock jumps 5% after BofA upgrades to Buy on profit outlook
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Affirm Holdings (NASDAQ:AFRM) stock climbed 5.1% in Tuesday premarket trading after Bank of America upgraded the provider of “Buy Now, Pay Later” financing to Buy from Neutral as the company appears to be closer to GAAP profitability than consensus estimates suggest.
“F4Q print/guide could be a positive catalyst, and F25 forecasts seem achievable,” analyst Jason Kupferberg wrote in a note to clients. “A lower interest rate regime should also be supportive of RLTC (revenue less transaction costs, the most important P&L metric), and we are bullish on new/expanded partnerships (i.e.,Apple).”
The analyst suspects that Wall Street estimates are “mis-modeling” Affirm’s (AFRM) warrant expense and share-based compensation.With warrant expense and share-based compensation grinding lower, Kupferberg forecasts that the company will turn GAAP profitable in FY 2026, faster than consensus estimates expect. Meanwhile, the average Wall Street EPS consensus for FY2026 stands at -$1.30.
The biggest risk to BofA’s Buy call is lower discretionary spending in the lower-to-middle-income-consumer rungs.
BofA’s Buy rating contrasts with the SA Quant rating and the average Wall Street rating, both at Hold, and aligns with the average SA Analyst rating of Buy.