Affirm (NASDAQ:AFRM) has been awarded a higher price target from Bank of America analysts following what the firm described as a strong fiscal third quarter performance that exceeded expectations despite ongoing macroeconomic uncertainty.
Bank of America reiterated its “Buy” rating on the buy now, pay later company and raised its price objective to US$88 from US$82. Shares were up about 3.5% at $66 on Monday afternoon.
The analysts noted that the company’s fiscal third quarter results came in ahead of both Bank of America and broader Wall Street expectations across gross merchandise volume (GMV), revenue less transaction costs (RLTC), and operating income. The outperformance was attributed to steady consumer demand, disciplined underwriting, and improving monetization trends.
The firm said the market reaction following the earnings release appeared muted despite the better-than-expected results, adding that investors are now focused on Affirm’s Investor Forum scheduled for May 12, where updated medium-term guidance, particularly around RLTC margins, is expected to be a key catalyst.
Bank of America also highlighted Affirm’s underwriting capabilities, noting that the company continues to manage credit quality effectively despite having one of the highest non-prime customer exposures among peers. While delinquencies increased modestly during the quarter, analysts said about half of the rise was linked to stronger tax refund seasonality, which they characterized as constructive.
The note also pointed to management commentary around adopting an “AI-first” development approach aimed at improving operational efficiency and productivity rather than reducing headcount. According to the analysts, these initiatives are contributing to stronger unit economics and more durable margins as transaction volumes grow.
Bank of America said its updated valuation reflects improving operating leverage, disciplined expense management, stable funding costs, and continued momentum in Affirm’s card business.
The firm added that it sees improving visibility into sustained profitability and believes the company remains positioned for further upside.