Bernstein initiates Affirm at Outperform, says "optionalities abound"

Investing.com -- Bernstein initiated coverage of Affirm with an Outperform rating and a $100 price target in a note on Wednesday, arguing the buy-now-pay-later company sits "at a unique intersection of several tailwinds" despite broader skepticism toward fintech.

Analyst Harshita Rawat said Affirm "has had a remarkable growth journey" even as the fintech sector has endured its own hype cycle and volatility.

The firm forecasts 28% GMV CAGR from 2026-2029, compared with 35% from 2023-2026, alongside 27% growth in revenue less transaction costs, the company's key KPI. Bernstein projects roughly 50% GAAP EPS CAGR and $4.11 in GAAP EPS by 2029, 10% above consensus.

On total addressable market, Bernstein noted BNPL currently represents only about 5% of U.S. e-commerce and 1% of overall card spend, while more than 80% of BNPL users already have access to credit cards.

The firm said merchants and platforms are "increasingly turning to these methods to drive greater conversion and order values."

Bernstein highlighted Affirm's expanding network effects across roughly 27 million users and 515,000 merchants, along with the success of Affirm Card, now representing 18% of GMV, up from about 1% in 2023, and "growing 4x faster than the core" with accretive margin.

Affirm Card still has room to grow given only 16% penetration within Affirm's customer base, noted Rawat.

The analyst also flagged macro conditions as the biggest risk to watch, though it noted Affirm's weighted average loan duration is only about five months, alongside an increasingly diverse set of funding partners.

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