Bernstein Initiates Affirm with Outperform Rating, Sets $100 Price Target

Bernstein initiated coverage of Affirm (AFRM) with an Outperform rating and a $100 price target, arguing the buy-now-pay-later (BNPL) company is poised for significant growth despite broader market skepticism toward the fintech sector. In a note to clients on Wednesday, the investment firm stated that Affirm sits "at a unique intersection of several tailwinds" and that "optionalities abound."

Analyst's Bullish Thesis

Bernstein analyst Harshita Rawat highlighted Affirm's "remarkable growth journey" amid the fintech industry's recent volatility. The firm's positive outlook is underpinned by strong forward-looking projections and the company's expanding market position.

The firm forecasts a 28% compound annual growth rate (CAGR) in Gross Merchandise Volume (GMV) for Affirm from 2026 to 2029. It also projects 27% growth in revenue less transaction costs, a key performance indicator for the company. Bernstein's model anticipates Affirm will reach $4.11 in GAAP EPS by 2029, a figure that is 10% above the current Wall Street consensus.

Market Opportunity and Key Drivers

Bernstein emphasized the significant room for expansion in the BNPL sector. The note pointed out that BNPL currently accounts for only about 5% of U.S. e-commerce volume and just 1% of overall card spending, suggesting a large total addressable market.

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A primary growth driver is the Affirm Card, which has rapidly expanded to represent 18% of GMV, up from approximately 1% in 2023. According to the note, the card is growing four times faster than Affirm's core business and has an accretive margin. With only 16% penetration within Affirm's existing customer base, Bernstein sees substantial runway for further growth.

Risks and Mitigating Factors

While identifying macroeconomic conditions as the most significant risk, Bernstein noted several mitigating factors. The firm highlighted Affirm's relatively short weighted average loan duration of about five months, which can limit exposure in a shifting economic environment.

Furthermore, the analyst pointed to the company's expanding network effects, which include roughly 27 million users and 515,000 merchants. This growing ecosystem, combined with an increasingly diverse set of funding partners, provides a stronger foundation to navigate potential economic headwinds.