Why Morgan Stanley Sees 52% Upside In Affirm? - Affirm Holdings (NASDAQ:AFRM)

Affirm Holdings Inc AFRM reported Q4 revenue of $261.8 million, up 71% year-on-year, beating the consensus of $226.4 million.
The EPS loss of $(0.48) missed the consensus loss of $(0.29).
The digital and mobile-first commerce platform sees Q1 revenue of $240 million - $250 million, above the consensus of $233.9 million.
During Q4, Affirm increased the number of merchants on its platform by more than fivefold, more than doubled gross merchandise volume, and grew active consumers by 97% Y/Y.
Morgan Stanley analyst James Faucette raised the price target to $140 from $120, implying a 52.1% upside, and affirmed an Overweight.
Faster than expected growth in merchants and customers looks likely to continue driving rapid growth, and admitted to being "more conservative" than some on key contributors like the company's partnerships with Peloton Interactive Inc PTON and Amazon.com Inc AMZN, Faucette noted.
He also thinks the company's more sophisticated credit underwriting engine than many other new Buy Now, Pay Later providers to give it "a meaningful lead" that improves its strategic advantages for its merchants, customers, and other partners.
Deutsche Bank analyst Bryan Keane raised the PT to $105 from $67, implying a 14.1% upside, and reiterated a Hold.
The company reported "solid" Q4 gross merchandise volume growth and has "multiple future tailwinds and upside potential," Keane noted.
DA Davidson analyst Christopher Brendler raised the PT to $110 from $85, indicating a 19.5% upside, but maintained a Neutral.
The company reported an "impressive" set of Q4 results, and his concern about valuation seems "overdone" ahead of the launch of its Amazon partnership, Brendler noted.
Brendler, however, still preferred to see the full details from Affirm's 10-K as the mix shifted away from the long-duration 0% Peloton deal, and the recent off-balance sheet securitization may be "distorting trends."
Price Action: AFRM shares traded higher by 17.6% at $108.28 on the last check Friday.

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