UPDATE: Goldman Sachs Starts Affirm Holdings Inc. (AFRM) at Neutral

Goldman Sachs analyst Michael Ng initiates coverage on Affirm Holdings Inc. (NASDAQ: AFRM) with a Neutral rating and a price target of $22.00.

The analyst comments "AFRM is the leading US Buy Now, Pay Later (BNPL) provider with the widest breadth in product offering (e.g., Pay in 4, interest bearing, short/long duration, adaptive checkout), a track record of enterprise merchant integration (e.g., Amazon, Shopify, Walmart), with robust underwriting processes and disclosures. In our view, AFRM should be a key driver and beneficiary of US BNPL industry growth, which was at ~4% penetration of US e-commerce in 2021 and we estimate should rise to ~9% penetration by 2025 (>$100 bn GMV). That said, AFRM's transaction margins likely will be pressured by increased provision for credit losses & funding costs against the backdrop of rising interest rates and weakening consumer credit. Gross take-rates may be pressured by a mix shift toward larger enterprise merchants and shorter duration products (though we recognize this should be a tailwind to GMV), as well as ongoing competition. Although AFRM's stated commitment to disclosures and underwriting puts it in a stronger position among its key competitors, the evolving US BNPL regulatory landscape results in the risk of potential regulation that could reduce the pace of consumer and merchant adoption."

For an analyst ratings summary and ratings history on Affirm Holdings Inc. click here. For more ratings news on Affirm Holdings Inc. click here.

Shares of Affirm Holdings Inc. closed at $23.61 yesterday.

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