Affirm's Guidance Implies Slowdown In GMV Growth: 7 Analysts Examine Q2 Print

Shares of Affirm Holdings Inc AFRM came under pressure in early trading on Friday, after rising sharply on the company’s upbeat results for the fiscal second quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Piper Sandler analyst Kevin Barker maintained an Underweight rating, while lifting the price target from $14 to $19.
• Stephens analyst Vincent Caintic reiterated an Underweight rating, while raising the price target from $6 to $16.
• JPMorgan analyst Reginald Smith reaffirmed a Neutral rating, while raising the price target from $35 to $41.
• Wedbush analyst David Chiaverini reiterated an Underperform rating and price target of $20.
• Mizuho Securities analyst Dan Dolev maintained a Buy rating and price target of $65.
• Truist Securities analyst Andrew Jeffrey reaffirmed a Buy rating and price target of $60.
• Goldman Sachs analyst Michael Ng maintained a Neutral rating and price target of $20.

Check out other analyst stock ratings.

Piper Sandler: “This was a very good quarter for AFRM whereby the company produced a broad-based beat relative to our estimates on various metrics, including GMV growth, revenue, and RTLC margins,” Barker wrote in a note. The company attributed the performance to strong growth from its Shopify SHOP partnership and continued growth in transactions per customer, he added.

“However, guidance for 2H24 implies revenue growth, adjusted operating income growth and GMV growth will slow from the first half of the year,” the analyst further stated.

Stephens: “F2Q24 results beat estimates across top- and bottom-line items, F3Q24 guidance is also higher than consensus estimates,” Caintic wrote in a note.

Investors punished the stock as the fiscal fourth quarter guidance is 5% below consensus on GMV, “leading to 2% lower on revenues,” the analyst stated.

He added, however, that “the BNPL holiday sales gains (Affirm beat F2Q24 guidance by $700m) translated into meaningful sticky GMV for the rest of the year (Full-Year F2024 guidance raised $1 billion).”

JPMorgan: Affirm Holdings reported a “record” quarter, “handily beating guidance and Street estimates on all key metrics,” Smith said.

“AFRM has a track record of beats, but we were especially encouraged by Shopify trends (GMV up 60%), robust net interest income growth (higher balances and APRs), and expense reductions, which bode well for F2H24 and beyond,” the analyst wrote. “We aren’t reading much into the soft outlook, as Management has a track record of beating,” he added.

Mizuho Securities: Affirm Holdings reported “very strong” quarterly results that were “excellent across the board,” Dolev said in a note. He added that the elevated expectations were a result of the negative stock reaction.

“Over the last 8 quarters, AFRM has beaten midpoint GMV guidance by 5% on average and consensus expectations by 4% on average,” the analyst further stated.

Wedbush: “Affirm reported a solid quarter and above our forecast, but we believe the bar was high heading into the print given the widely-known positive share gains BNPL enjoyed during Black Friday/Cyber Monday,” Chiaverini wrote in a note.

The guidance for the fiscal third quarter implies “a step down in adjusted operating margin to 6%-8% compared to 16% in 2Q24,” the analyst stated. “We view the GMV guide as modestly disappointing given the increase to fiscal FY24 GMV guidance is only modestly above the beat in the quarter, implying a slowdown in GMV growth in the back half of fiscal 2024,” he further said.

Truist Securities: The Buy Now Pay Later (BNPL) is still in infancy stage, at less than 5% of eCommerce tender and less than 1% of carded spend, Jeffrey said in a note. “Our view is BNPL will gain tender share, analogous to debit's rise over the last 20+ yrs, and view Affirm as the tech and product leader,” he added.

“The co's merchant integrations make it the Enterprise partner of choice, in our view,” evidenced by its relationships with Amazon AMZN and Shopify, the analyst further stated.

Goldman Sachs: Affirm’s GMV growth accelerated for the third consecutive quarter to 32% year-over-year in the fiscal second quarter, “driven in part by outperformance in AFRM’s enterprise platform partners, with volumes on Shopify growing 2x faster than overall GMV,” Ng said.

Affirm Card generated around $400 million in GMV in the quarter, across more than 700,000 active card holders, “who are highly engaged and transacted 4x more than Affirm users overall,” the analyst wrote. “While F3Q24 guidance beat & the company raised F2024 RLTC and adjusted operating income margin outlook, AFRM expects non-transaction opex to step up in the back half of the year driven by higher payroll tax & investment in core growth opportunities such as international expansion,” he added.

AFRM Price Action: Shares of Affirm Holdings declined by 10.16% to $44.21 at the time of publication on Friday.