Affirm (AFRM)'s fiscal second-quarter results topped expectations against a high bar, and the company has the ability to increase its adjusted operating income margins to 30% in at least two years, Morgan Stanley analysts said in a note to clients Friday.

"Affirm delivered (and then some) against what appears to be persistently increasing expectations," Morgan Stanley analysts wrote, following the company's Q2 results, released late Thursday.

"Despite widespread concerns about the potential for plateauing growth with larger enterprise merchant partners, Affirm appears to be gaining incremental share of checkout, " the analysts added.

"We are raising our estimates to account for F2Q25 results, the updated FY25 outlook, as well as a more constructive view about Affirm's ability to operate at previously higher-than-expected operating margins," the analysts wrote.

Morgan Stanley raised its price target on the stock to $65 a share from $55.

Shares of Affirm were up over 21% in recent trading.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

Price: 75.07, Change: +13.32, Percent Change: +21.57