Affirm Holdings, Inc. (AFRM) saw its shares surge 5% in pre-market trading on Tuesday, following an analyst upgrade and optimistic outlook for the company's holiday sales performance and potential regulatory benefits.

Compass Point analysts upgraded Affirm to a "Neutral" rating from "Sell," raising their price target to $61 from $20. The firm cited the company's re-accelerating growth prospects as the primary reason for the upgrade.

Additionally, Morgan Stanley analysts maintained their "Equal-Weight" rating on Affirm but increased their price target to $55 from $39. The analysts expect Affirm to report "robust" gross merchandise volume (GMV) results, backed by strong Black Friday and Cyber Monday sales, as well as growth in non-store sales in December. Affirm's partnerships with major e-commerce platforms like Amazon.com and Shopify, as well as new merchant additions like Garmin and Hotels.com, are also expected to contribute to the company's GMV growth.