By Mackenzie Tatananni

Affirm Holdings stock is among the leading contenders in the fintech sector, TD Cowen analysts argued on Tuesday, as they initiated coverage on shares of the buy-now, pay-later company.

Analysts led by Moshe Orenbuch initiated coverage at Buy with a $50 price target. Shares of Affirm were up 0.8% to $37.87 on Tuesday, with the firm's price target suggesting a potential 32% upside. The S&P 500 was up 1.6%, while the tech-heavy Nasdaq Composite rose 1.4%.

The analysts noted that Affirm is one of the top performing BNPL brands in the nation, boasting "likely the most pro-consumer practices in the industry." The company also has a strong funding program that has historically allowed it to get better terms in the capital market than the overall consumer lending industry, the analysts added.

A key selling point is the company's relationship with "heavyweight partners" in e-commerce, namely Amazon and Shopify, which allows Affirm to go after volume from both large and small businesses more effectively than rivals.

While uncertainty continues to mount around the direction of economic growth and credit, Affirm has proven its ability to endure hard times, notably outperforming nonprime lenders during a difficult credit period in 2022 and 2023, the analysts said. Weak employment could lead to a slowdown in gross margin volume growth, or the total dollar amount of all transactions on the Affirm platform over a given period, net refunds.

However, the analysts stressed that any impact on profits would be short-term, and "would not likely change the longer term trajectory on profitability." In their view, a tightening of credit in the industry will help Affirm serve more customers, "given its loans are shorter duration and purpose-driven."

While Affirm rose slightly on Tuesday, peers were trading mixed. PayPal was up 1.9%, Upstart fell 2%, and Block was mostly flat.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 08, 2025 13:47 ET (17:47 GMT)

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