BNPL Company Affirm Holdings Exhibits Strong Growth And Fair Valuation Amid Regulatory Risks, Says Analyst

JMP Securities analyst David Scharf initiated coverage on Affirm Holdings Inc AFRM with a Market Perform rating.

The company is a “founding father” of the Buy Now Pay Later (BNPL) industry, having underwritten $73 billion of consumer loans since its founding in 2012 and issued $8 billion of securitizations, as per Scharf.

Over the past few years, the analyst noted Affirm’s business model has diversified and strengthened to create a more balanced revenue, credit, and customer mix. He also appreciated the advantages of operating a closed-loop payment network where the owner can capture more proprietary transaction-level data to feed its underwriting engine.

Shares are currently trading at 40x Scharf’s fiscal 2026 adjusted EPS estimate, compared to 15x and 10x, respectively, for its two closest comparable businesses, American Express Co AXP and Discover Financial Services DFS; accordingly, he noted the shares as fairly valued given the higher valuation and regulatory risks balancing out the strong growth and the value of Affirm’s proprietary closed-loop network.

Notwithstanding the attractive growth dynamics at AFRM and Scharf’s conviction that BNPL is “here to stay,” the analyst noted that Affirm is an unsecured consumer lender with the same credit, funding, interest rate, and macro risks as other non-prime lenders in his coverage.

Scharf projected second-quarter revenue and adjusted EPS of $591.1 million and $0.13.

Price Action: AFRM shares were trading lower by 2.13% at $29.81 at the last check Friday.

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