Shares of Affirm Holdings (AFRM) are up 10% on April 17 after Morgan Stanley (MS) named the stock a “Top Pick.”
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The Wall Street investment bank said that AFRM stock has been unfairly caught in what it called an “overdone” private credit overhang and that the shares have several catalysts looming on the horizon. In a note to clients, Morgan Stanley said that there is potential for Affirm to grow 30% or more over the near to medium term.
The bank stressed that concerns around private credit are overstated and likely to fade in coming months, sending the stock higher. Morgan Stanley also pointed to a constructive funding backdrop for Affirm and said that its credit performance and capital markets execution have been strong.
Catalysts for AFRM Stock
Morgan Stanley highlighted Affirm’s May Investor Forum as a potential catalyst for the stock, with expected updates on gross merchandise volume, margins, and long-term earnings targets, all of which could be favorable and create bullish sentiment among investors.
The bank also expects Affirm to introduce a fiscal 2028 earnings per share (EPS) target of $2.50 to $3.00, which it called “conservative.” In conclusion, Morgan Stanley writes that AFRM stock presents “one of the most attractive risk-reward setups in our coverage.” The bank maintains a $76 price target on AFRM stock, which is 17% higher than where the shares currently trade.
Is AFRM Stock a Buy?
Affirm’s stock has a consensus Strong Buy rating among 22 Wall Street analysts. That rating is based on 17 Buy and five Hold recommendations issued in the last three months. The average AFRM price target of $82.30 implies 25% upside from current levels.
