Affirm Holdings AFRM shares rose about 11% in trading on Friday after the buy-now, pay-later company reported stronger-than-expected fourth-quarter results and delivered its most profitable quarter on record.
The company reported adjusted earnings per share of $4.62, compared with analysts’ expectations of $3.77.
Revenue reached $1.2 billion, beating the consensus estimate of $1.1 billion.
Revenue increased 33% from a year earlier, while gross merchandise volume, or GMV, climbed 36% to $14.1 billion.
The result marked Affirm’s 11th consecutive quarter of GMV growth of 30% or more.
Revenue less transaction costs, a closely watched measure of the company’s underlying economics, increased 39% to $589 million.
Affirm’s reported net income reached $1.6 billion, helped significantly by the release of a valuation allowance on most of its domestic deferred tax assets.
Company expects strong GMV growth
Affirm also provided an upbeat outlook for fiscal 2027, forecasting GMV of more than $64 billion.
That would represent growth of at least 27% from approximately $50.2 billion in fiscal 2026.
The company maintained its revenue-less-transaction-costs take rate at about 4.16% of GMV, broadly in line with fiscal 2026 levels.
The outlook has encouraged analysts who believe management may be leaving room for upside.
UBS raised its price target to $90 from $82 while maintaining a Neutral rating.
The firm noted that Affirm’s first-quarter GMV outlook implies growth of around 30% at the high end despite several difficult comparisons.
Those include the shift in the timing of Prime Day from July to June in 2026 and the final two months of comparisons against the loss of Walmart volumes, which moved away from Affirm in September.
Analysts see room for upside
BofA Securities raised its price target to $104 from $93 and maintained a Buy rating.
This represents an almost 35% upside.
The firm said Affirm’s fourth-quarter beat and fiscal 2027 outlook appeared conservative following management commentary on the earnings call.
BofA said movements in provision density appeared to reflect changes in loan product and funding mix rather than deterioration in underlying credit quality or the company’s international exposure.
However, the bank also pointed to several potential growth drivers that are not included in Affirm’s current guidance, including a possible bank charter, business-to-business operations, UK long-duration lending and brand-sponsored promotions.
Affirm’s card growth also remains fully organic, with no contribution yet from its Fiserv bank issuance partnership, BofA said.
Needham raised its price target to $100 from $90 and retained a Buy rating, citing the company’s ability to execute across growth, profitability, credit and funding.
Citizens also reiterated a Market Outperform rating with an $85 price target.
Stock has already rallied sharply
Affirm’s latest results come after a strong run for the stock. Shares have gained about 65% over the past six months, bringing the company’s market value to roughly $26 billion.
The stock was trading around $77.49 before Friday’s move, while analyst price targets range from $55 to $124.
The combination of accelerating transaction volumes, improving profitability, and a relatively conservative fiscal 2027 outlook has strengthened the case for further gains, although the sharp rise in the stock also leaves investors with higher expectations.
For now, Affirm’s ability to maintain GMV growth above 30% while expanding its profitability appears to be giving investors confidence that its growth story remains intact.
With price targets spread as wide as $55 to $124, many investors are likely to keep close tabs on Affirm through investment apps in the weeks ahead.
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