Mizuho: Affirm shares could more than double from here

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Shares of Affirm Holdings Inc (NASDAQ: AFRM) have tanked over 40% in less than 48 hours on disappointing guidance for Q3 revenue. The massive sell-off, as per Dan Dolev, is an opportunity to set foot in a quality stock at a deep discount.  

Dolev’s bull case for Affirm Holdings

Affirm’s dovish outlook for third-quarter revenue raised questions on its BNPL partnership with Amazon.com Inc, but the senior research analyst at Mizuho defended his bullish call on CNBC’s “The Exchange” and said:

Affirm is a category leader in a disruptive market. They’re creating an alternative to credit. There’s growing demand. Millions of dollars of volume on Amazon within a month. Being a category leader in a fast-growing secular trend is more powerful than the stock is reflecting today.

Dolev has a buy rating on AFRM with a price target of $100 a share that represents a more than 100% upside from here.

What about the charge-offs though?

Dolev agrees that charge-offs might lead to more regulatory scrutiny in this space but doesn’t see it much of a threat for Affirm Holdings. He added:

There are delinquencies but they are starting to go back down. It’s below 2019 levels. So, I would take their word for it that they can control it. If they see it’s becoming too big of a problem, they’d restrain the supply and the charge-offs will come under control. So, people are panicking too much.

Apart from Affirm, Dolev sees Fidelity National Information Services Inc in financials as a stock that’s well-positioned for the upcoming rising rate environment. Goldman Sachs expects the U.S. Federal Reserve to hike rates up to seven times this year.  

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Source: https://invezz.com/news/2022/02/11/mizuho-affirm-shares-could-more-than-double-from-here/