Bank of America has identified a buying opportunity in Affirm following a 5% decline in its stock price after the company's quarterly earnings report. The bank maintained its buy rating and increased its 12-month price target from $82 to $88, indicating a potential upside of 37% from the stock's closing price on Friday. Affirm's stock has seen a significant increase of 32% over the past month.
Analyst Matthew O'Neill noted that the earnings report demonstrated Affirm's strong performance as an underwriter, despite having the highest non-prime exposure compared to its peers.
The company's fiscal third-quarter results exceeded expectations, with revenue of $1.04 billion surpassing the anticipated $995.3 million, and operating income of $281 million exceeding the consensus estimate of $248.9 million. For the fiscal year ending June 30, Affirm projected revenue between $4.175 billion and $4.205 billion, which is above the consensus estimate of $4.14 billion.
Despite the recent stock pullback, Bank of America believes this is a temporary setback and expects the stock to continue its upward trajectory, especially ahead of the upcoming Investor Forum on May 12. Overall, 24 out of 32 analysts covering Affirm rate it as a buy or strong buy, reflecting a positive outlook for the stock, which has risen 38% over the past year, primarily driven by recent gains