AFRM Stock Headed For Third Week Of Gains - Morgan Stanley Names Affirm 'Top Pick'

• Morgan Stanley sees potential upward revisions across key metrics, including gross merchandise volume, margins, and earnings.
• The firm said concerns around private credit exposure are overstated.
• The Investor Forum in May could act as a catalyst for higher guidance and stock momentum.

Affirm Holdings Inc. (AFRM) is looking for a third straight week of gains, supported by a bullish call from Morgan Stanley, which identified the buy-now-pay-later provider as its top investment idea amid improving growth expectations and upcoming catalysts.

The firm reiterated its ‘Overweight’ rating on the stock and set a $76 price target, implying a 26% upside potential from the stock’s closing price on Thursday.

Estimate Revisions In Focus

Analyst James Faucette expects Affirm’s upcoming Investor Forum in May to serve as a key inflection point, according to TheFly.

 Faucette indicated that Affirm could see upgrades to its projections for gross merchandise volume, profitability, and earnings per share. The company may provide updated financial targets in the event, reinforcing its medium-term growth trajectory, he stated. 

Affirm stock traded over 6% higher on Friday afternoon. On Stocktwits, retail sentiment around the stock changed to ‘extremely bullish’ from ‘bullish’ territory the previous day amid ‘high’ message volume levels. 

Credit Concerns Seen As Overdone

Investor anxiety around private credit exposure has weighed on sentiment in recent months, but Morgan Stanley believes those fears may be exaggerated. 

According to a CNBC report, the firm noted that asset-backed securities spreads have remained stable, indicating continued access to funding and healthy demand from capital markets.

“AFRM is our Top Pick on upward estimate revision potential, overdone private credit fears, and a strong catalyst path,” said Faucette.

The company is also scheduled to report its third-quarter earnings on May 7. Analysts expect revenue of $995.7 million and earnings per share (EPS) of $0.68, according to Fiscal AI data. 

AFRM stock has declined by over 13% year-to-date.

Also See: INTC Stock Hits 25-Year High: Retail Believes Next Week Will Be 'Most Important’ For Intel

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