Affirm Holdings (AFRM, Financial) has experienced a significant stock price increase this week, driven by positive ratings from three major Wall Street institutions. The latest endorsement comes from Wells Fargo (WFC), which upgraded its rating on Affirm to "Overweight" and raised its price target from $40 to $52. As a result, Affirm's stock rose over 12% to $47.08, accumulating a 20% gain over the past four days.
Wells Fargo analysts, led by Andrew Bauch, highlighted several growth catalysts for Affirm that could boost its stock price in the coming year. These include a recently announced payment partnership with Apple (AAPL) and declining interest rates that are expected to spur growth and reduce financing costs. Analysts noted Affirm's proven ability to capture market share in the e-commerce checkout space over the years.
Affirm anticipates achieving operating profit per GAAP standards by the fourth quarter of its fiscal year 2025. Wells Fargo believes this supports its high valuation, as Affirm is currently trading at 52 times its expected earnings for 2026. In comparison, fintech peer Ally Financial trades at six times, and credit card giant American Express trades at 16 times their expected earnings. Analysts remarked that valuations are becoming more attractive as GAAP profitability approaches.
This upgrade from Wells Fargo follows similar positive ratings from BTIG and Morgan Stanley (MS) earlier in the week. BTIG upgraded Affirm to "Buy," while Morgan Stanley adjusted its rating from "Underweight" to "Equal-weight," citing the company’s strategies targeting high-income consumers.
Wall Street's outlook on Affirm has become more optimistic over recent months. According to FactSet data, 45% of analysts now rate Affirm as a "Buy," up from just 28% in April.
