69% Upside for Affirm? Citi Thinks So, and Here’s How

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Key TakeawaysAffirm is down 23% from its July high after a quarter of fast growth and higher late payments. Citi kept its Buy rating and its $115 target, 69% above today’s price.

Affirm Holdings (AFRM:NASDAQ) just grew its volume 34%, and the stock is still down 23% from its July high. Citi's Bryan Keane reiterated his Buy rating and $115 price target on Nov. 11, 69% above today's price.

Affirm's fiscal first-quarter results, out Nov. 5, beat its own guidance: gross merchandise volume (GMV) rose 34% to $14.4 billion, and revenue rose 35% to $1.26 billion.

But 30-day-plus delinquencies on its monthly loans rose 35 basis points from the June quarter to 2.9%. CFO Rob O'Hare said on the call that Affirm chose to "run some experiments within the approvals and the origination" in September. Affirm also guided its December-quarter GAAP operating margin below what analysts expected, on higher warrant expense for a large partner signing up new users.

See the full breakdown of Buy, Hold, and Sell ratings on Affirm, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Affirm's Analyst Ratings

Keane laid out his case in an early-October note, and Affirm delivered on most of it.

He expected GMV growth at the high end of management's 27% to 30% outlook. Affirm grew 34%, and O'Hare said the business is "growing at a high 30s rate today."

He also pointed to early-stage partnerships with Intuit's QuickBooks, ServiceTitan and Amazon in the UK. CEO Max Levchin said on the call that services, the category those software partners feed, was the best performer of the categories Affirm breaks out.

And he put the hit from recent rate moves at 15 to 20 basis points of revenue less transaction costs (RLTC). Funding costs rose 27 basis points from the June quarter, yet RLTC came in at 4.3% of GMV, above management's 3.75% to 4% medium-term range.

The consensus target is $96, 41% above today's price but 20% below Citi's. It's also about where it was a year ago:

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