Affirm Holdings Surges as It Gets a ‘Buy’ Rating From Goldman Sachs

Shares of Affirm Holdings (AFRM) jumped in intraday trading Monday as Goldman Sachs initiated coverage of the buy now, pay later (BNPL) loan service with a “buy” rating, calling it “the leading provider of modern credit solutions for consumers.”

Goldman also set a price target of $42, a 41% premium to the closing price Friday.

Goldman Analysts Impressed With Sophistication of Affirm’s Underwriting

The analysts noted that Affirm had “a diverse portfolio of products for point of sale financing, and every day spending,” and that they were particularly impressed with the sophistication of its underwriting compared with other financial technology (fintech) companies. They added that they liked how the firm had a “strong track record of achieving well managed credit outcomes despite growing faster than peers.”

The analysts pointed out that Affirm’s solid underwriting will allow it to increase its reach with subprime and near-prime borrowers, which it noted is a market that’s been hard for many lenders to “sustainably participate in.” They also listed as positives rising overall demand for BNPL and Pay-in-4 offerings and Affirm’s strong distribution with major e-commerce platforms. They concluded that all of those “should drive strong market share gains and provide a path towards AFRM becoming one of the first new closed-loop platforms in the payments ecosystem.”

Affirm Holdings shares jumped roughly 9% to $32.59 as of 1:15 p.m. ET Monday but are about 34% lower year-to-date.