On Monday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Affirm Holdings Inc. (NASDAQ: NASDAQ:AFRM), increasing the price target to $75 from the previous $45 while retaining a Hold rating on the stock. This adjustment reflects the bank's response to Affirm's improving fundamentals and growth prospects.
The revision follows a fireside chat with Affirm's recently promoted Chief Financial Officer, Rob O'Hare, in which various topics were discussed, including the macroeconomic environment, the Affirm Card, credit trends, profitability, and the competitive landscape in the Buy Now, Pay Later (BNPL) sector.
Notably, Affirm did not provide a volume update on Black Friday/Cyber Monday spending, but indicated strength in travel and consumer electronics spending—areas considered key indicators of consumer discretionary spend.
Affirm's performance is reported to be outpacing the broader e-commerce sector, with the company benefiting from the overall shift towards online retail. The BNPL model now accounts for approximately 8% of U.S. e-commerce. The discussion with O'Hare also highlighted the potential of the Affirm Card, which is expected to roll out to existing users and could significantly expand Affirm's total addressable market (TAM).
Additionally, Affirm announced a new forward flow partnership with Sixth Street, valued at around $4 billion. This marks Affirm's largest forward flow program to date and is intended to provide the capacity needed to fund anticipated growth. The terms of the partnership, including cost of capital and returns, are reportedly consistent with Affirm's other forward flow programs.
Deutsche Bank's revised price target is based on these positive indicators, signaling confidence in Affirm's strategic path and the opportunities that lie ahead for the company. The Hold rating suggests that while the outlook for Affirm is favorable, the bank advises investors to maintain their current positions without further action at this time.
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