Affirm upgraded at Wells Fargo on eComm checkout share, palatable valuation case

Affirm Holdings (NASDAQ:AFRM) was upgraded at Wells Fargo, citing the payment network company has “demonstrated its right to win incremental eComm checkout share” and the “valuation case has finally become palatable”.

The availability of Affirm (AFRM) financing through Apple Pay has increased its potential exposure to that product’s generally younger and higher income demographics, Morgan Stanley had said earlier.

Its use of 0% offers should increase engagement with merchants and manufacturers. And lower interest rates should lead to more promotional rates, according to MS.

Wells Fargo sees growth catalysts over the next year in the Apple Pay partnership, an easing rate cycle benefitting growth capacity and lower funding costs, and new markets.

The stock has risen by 113.25% in the last one year, but has lost 14.51% year-to-date. While valuation has historically been difficult to justify, GAAP profitability has alleviated this obstacle, the financial services company said.

Wells raised its recommendation on the stock to Overweight from Equal Weight, and increased the price target to $52 from $40.

AFRM shares were trading +2.95% Friday pre-market at $43.25.

The average sell-side analyst rating on the stock is Hold, while Seeking Alpha authors give it a Buy rating. Meanwhile, the Quant Rating system sees AFRM as a Strong Buy.

Affirm Holdings (AFRM) was added as a new long idea at Hedgeye.