Investors were clearly in a mood to buy now and pay immediately for shares of specialty financial company Affirm (NASDAQ: AFRM) on Friday. The buy now, pay later (BNPL) commerce facilitator didn't have any proprietary news to deliver; rather, it benefited from the latest in a recent series of analyst recommendation upgrades. With this wind at its back, the company's share price zoomed more than 12% higher on the day.
Third time's the charm
In the third such instance this week, a pundit tracking Affirm stock changed his recommendation for the better. This person was Wells Fargo's Andrew Bauch, who now feels the company is worthy of an overweight (i.e., buy) designation; previous to that he had tagged it as an equalweight (hold). Accompanying this was a 30% boost in Bauch's target price, to $52 per share from $40.
The analyst wrote in his latest Affirm research note that the BNPL specialist boasts credit sophistication that is at least the equal of any peer in the market. He also waxed bullish about its "unique and diverse" funding program, and its dynamic pricing model.
In his view, these factors position Affirm for years of robust growth. Bauch added that three catalysts will also help the company post improving numbers, namely the company's recent partnership with Apple's Apple Pay feature, continued lowering of interest rates by the Federal Reserve, and venturing into new markets.
Favorable trends
The BNPL segment isn't anywhere as hot as it was several years ago, but it's realistic to think we're in for a comeback. Consumers tend to open their wallets more when borrowing is cheaper, meanwhile Apple Pay is a popular easy-pay option for the many owners of that company's devices. This stock is certainly worthy of consideration as a buy, per Bauch's new recommendation.
Should you invest $1,000 in Affirm right now?
Before you buy stock in Affirm, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Affirm wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,130!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 7, 2024
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
