By Mackenzie Tatananni

J.P. Morgan analysts stepped away from a recent conference with reinvigorated confidence in Affirm Holdings. In their view, the company is a formidable contender in the buy now, pay later space and will continue to snap up market share.

Shares of the fintech were trading up 5.9%, at $57.13, on Wednesday, a day after the company's chief operating officer, Michael Linford, appeared at the J.P. Morgan Technology, Media and Communications Conference.

Analysts Reginald Smith and Charles Pearce concluded that Affirm "remains in a position of strength, accelerating growth and taking share at checkout" in a note after the event. The firm rates Affirm at Overweight.

The J.P. Morgan team noted that gross merchandise value growth had accelerated in the third consecutive quarter, "which is impressive given Affirm's scale." GMV growth is a key metric representing the total dollar amount of all transactions in a given period, net of refunds.

During his appearance on Tuesday, Linford noted that spend accelerated in March and April, and credit trends held steady, even in the face of declining consumer confidence.

With this in mind, the company's fiscal-fourth-quarter guidance, which implies decelerating volume growth in May and June, could prove conservative, the analysts said.

While Affirm's latest earnings topped Wall Street's expectations, a weak outlook weighed on shares following the report. Management guided for fourth-quarter revenue between $815 million and $845 million. Analysts polled by FactSet had forecast revenue above the midpoint of the range.

On the earnings call, management stressed the company's ability to withstand periods of market turmoil. J.P. Morgan seemed to agree, arguing that the company's transaction-level underwriting model and short-duration loan portfolio allowed Affirm "to tighten credit quickly and limit balance sheet exposure to prolonged downturns."

The company touted several wins in its quarter, including 44% volume growth in 0% APR loans. Linford asserted that the surge should be seen as "a signal of the health of Affirm's business, particularly in an elevated rate environment," J.P. Morgan noted.

The firm also lauded two new client wins with big-box chain Costco Wholesale and payment platform UATP, which partners with hotels and airlines. The Costco deal, in particular, was giving shares a boost on Wednesday.

The 10-year contract with UATP is particularly noteworthy, in J.P. Morgan's view. The deal "materially lowers the barriers of entry to unlocking new partnerships with leading travel providers, which may not be fully appreciated by investors," the analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 14, 2025 14:06 ET (18:06 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.