Affirm Holdings Inc. (AFRM), a leading fintech company specializing in buy now, pay later (BNPL) solutions, is poised to unveil its fourth-quarter earnings report on Wednesday. This release is anticipated to offer valuable insights into the current state of consumer financial health and the growth trajectory of the BNPL sector, particularly for high-priced items.
Analysts are projecting fourth-quarter revenue of $603.66 million, a significant increase from the $445.83 million reported in the same period last year. Affirm has consistently exceeded revenue expectations for the past five quarters and nine out of the last ten. The company’s own guidance anticipates revenue within the range of $585 million to $605 million. In terms of earnings, analysts expect a loss of 51 cents per share, compared to a loss of 69 cents per share in the fourth quarter of last year. Affirm has beaten earnings expectations for five consecutive quarters and six out of the last ten.
While a strong fourth quarter is anticipated, JPMorgan analyst Reginald Smith cautions that the company’s guidance for fiscal 2025 might be conservative. Despite this, Smith maintains an Overweight rating and a $45 price target on Affirm stock, highlighting the company’s multi-year growth potential and margin expansion opportunities. He believes the upcoming earnings report will shed light on the positive impact of Affirm’s partnerships with major retailers like Shopify and Amazon, and the recent Apple Pay deal is seen as a future catalyst. The Apple Pay partnership is expected to go live in September 2024, alongside the expansion of new products like the Affirm Card. Smith suggests buying the stock on any weakness following the earnings release, given the recent 30% year-to-date decline in share price. He views this as a potentially attractive entry point.
Other analysts echo a similar sentiment: Mizuho reiterates an Outperform rating with a $65 price target, Bank of America upgraded its rating to Buy from Neutral with a $36 price target, and JMP Securities maintained a Market Perform rating.
Investors and analysts will be keenly watching Affirm’s partnerships with major retailers like Shopify, Amazon, and Apple. These partnerships play a crucial role in the company’s growth strategy. Affirm’s previous exclusivity arrangement with Walmart on BNPL services ended this year, with Walmart partnering with fintech One. Additionally, investor focus will be on gross merchandise volume (GMV) and commentary on average ticket size. This is particularly relevant in light of concerns about inflation and overall consumer health. Recent earnings reports from Walmart and Target highlighted their market share gains driven by value-seeking consumers. The key question is whether consumers are still willing to purchase high-ticket items and whether they are using BNPL services to facilitate these purchases.
Affirm’s stock closed at $32.49 on Tuesday, within a 52-week trading range of $15.00 to $52.48. The stock has surged by 80% over the past year.
