Emily Dattilo

Affirm Holdings is ramping capacity in the "buy now, pay later" market, Deutsche Bank wrote in a research report. The company will benefit from falling rates, but "on a lag."

Analysts led by Bryan Keane increased their price target on Affirm stock to $75 from $45, and reiterated a Hold rating.

Affirm stock slipped 1.2% to $69.84 in early trading Monday. This year, shares have gained 44% through Friday's close.

Deutsche Bank noted that while lower benchmark interest rates are advantageous for Affirm, "the company benefits on a lag given its mix of floating- and fixed-rate debt." The team figures that Affirm sees about 40 basis-points positive impact for every 100 basis points of decline in rates.

The analyst team hosted a conversation with new Chief Financial Officer Rob O'Hare to discuss the macro economic environment, the Affirm card, credit trends, and profitability, among other topics.

"While opting not to give a volume update on Black Friday/Cyber Monday spend, AFRM is seeing strength in spending on travel and consumer electronics (key indicators of consumer discretionary spend)," Deutsche Bank wrote, adding that the company continues to grow much faster than e-commerce at large. Beyond that, the Affirm Card will continue rolling out to current users and further the company's total addressable market, analysts continued.

The team also highlighted the announcement last week that Affirm and Sixth Street have entered into a long-term capital partnership in which the investment firm -- through its asset-based finance platform -- will invest up to $4 billion by purchasing Affirm loans over three years. This "adds capacity to fund the growth the company sees ahead of it," they wrote.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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December 16, 2024 10:26 ET (15:26 GMT)

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