Affirm stock rises as Goldman Sachs reiterates Buy rating on Apple Pay Later expansion

Affirm Holdings Inc. (AFRM) has expanded its Apple Pay Later integration to in-store purchases, allowing users to access its buy-now-pay-later options directly through Apple Wallet for in-person transactions. This strategic move positions Affirm to tap into a substantial portion of the over $1 trillion in Apple Pay spend, with Goldman Sachs estimating 80% occurs in-person. Multiple investment banks, including Goldman Sachs (reiterating Buy, $105 target), Mizuho (raising to $108), and UBS (raising to $85), have highlighted Affirm's strong financial health, 39% revenue growth, and Q4 FY25 results that surpassed expectations, underscoring the company's robust operational performance and significant growth potential within the digital wallet ecosystem.

Analysis

Affirm Holdings Inc. has strategically expanded its partnership with Apple, enabling its buy-now-pay-later (BNPL) service for in-store Apple Pay transactions. This move significantly increases Affirm's total addressable market by providing access to the substantial in-person segment of Apple Pay's spend volume, which Goldman Sachs estimates exceeded $1 trillion in 2024 with approximately 80% occurring in-person. The expansion is supported by Affirm's strong financial position, evidenced by a 39% revenue growth over the last twelve months, a "GOOD" financial health score from InvestingPro, and liquid assets that exceed short-term obligations. The company's recent operational execution has been robust, with fourth-quarter fiscal 2025 revenue less transaction costs of $425 million and adjusted EBIT of $237 million, both significantly surpassing analyst forecasts. This performance has fueled broad-based analyst confidence, reflected in reiterated Buy ratings and increased price targets from Goldman Sachs ($105), Truist ($72), Mizuho ($108), and UBS ($85). However, a key uncertainty remains, as Goldman Sachs noted there is currently no information available on the economic arrangement of the Apple partnership or the current size of Apple Pay Later.

Key Decisions for Investors

• The expansion into Apple's in-store payment ecosystem represents a primary growth catalyst, and investors should assess its potential to accelerate gross merchandise volume beyond current forecasts.
• It is crucial to monitor for any future disclosures regarding the economic terms of the Apple partnership, as the margin profile of this key growth channel is a significant unknown and a material risk factor.
• Given that the stock is trading near its 52-week high, investors should weigh the company's strong execution and positive analyst sentiment against a valuation that may already incorporate high expectations for growth from the Apple integration.