Why Affirm Holdings Stock Leaped 12% Higher Today

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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.


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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.

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