Morgan Stanley Upgrades Affirm, Cites Selloff Opportunity

Key Highlights of the Upgrade

Morgan Stanley has upgraded Affirm Holdings stock to Overweight, signaling that the recent sharp selloff presents an attractive entry point for investors. In response to the news, Affirm shares climbed 2.6% in premarket trading.

Recent Market Performance

Over the past month, Affirm's shares have fallen by more than 20%, a stark underperformance compared to its payments and consumer finance peers, which declined by a median of about 8%. This divergence forms the basis for the firm's optimistic reassessment.

Analyst Outlook and Valuation

While upgrading the stock, Morgan Stanley trimmed the price target to $76 from $83. The firm cited multiple compression across peer companies as the reason for the adjustment. The new target values the stock at 23 times its projected 2027 earnings.

Forward Outlook

The upgrade suggests that current market concerns about Affirm's growth and credit are likely to be temporary. The firm's analysis points to a valuable long-term opportunity despite the revised price target.

FAQ

Q: Why did Morgan Stanley upgrade Affirm stock?
A: The firm views the recent significant drop in share price as a compelling entry point, believing that growth and credit concerns are short-lived.

Q: What is the new price target for Affirm?
A: The price target was adjusted to $76 from $83, primarily due to valuation compression observed across the broader sector.

Source: Investing.com