Here's How This Analyst Views Fintech Stocks Affirm, Toast Amid Pandemic Recovery

MoffettNathanson analyst Eugene Simuni rolled out coverage of six stocks in the Fintech sector.
Simuni initiated coverage of Toast Inc TOST with a Sell rating and $19 price target (10.2% downside) and Affirm Holdings Inc AFRM with a Neutral rating and $50 price target (14.1% upside).
He thinks that Toast and Affirm are two Fintech disruptors whose longer-term growth trajectories are likely to disappoint compared to the anticipations indicated in current valuations.
Toast faces a challenging competitive environment from other "buy now, pay later" (BNPL) providers, which is likely to create "downward pressure" on its profit yield.
Other headwinds include the potential of higher financing costs and deterioration in the U.S. credit environment.
While Affirm is a leader in the U.S. BNPL market, the niche value proposition of BNPL services and rapidly compressing yields restricted its growth runway.
Meanwhile, the analyst noted that digital banks continue to capture market share from traditional financial service providers, like banks and credit unions that are struggling to keep up with technology demands.
Price Action: TOST shares closed lower by 11.9% at $21.19, and AFRM lower by 8.09% at $43.84 on Tuesday.

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