Goldman Sachs analyst Will Nance has initiated coverage on Affirm, a leading buy now, pay later (BNPL) company, with a buy rating and a price target of $42, suggesting a potential upside of over 40%. Despite a 35% drop in its share price this year, Nance is optimistic about Affirm's future, citing strong growth prospects and a premium valuation in the intermediate term. He points to the expanding U.S. BNPL market as a key catalyst for Affirm's growth, with these platforms gaining a larger share of retail spending. Nance also highlights Affirm's superior underwriting model, which has resulted in more stable credit losses compared to its peers. This, combined with Affirm's ability to manage revenue less transaction costs margins effectively, positions the company well for future growth. Additional growth opportunities for Affirm include its new Debit+ card, partnerships with Apple Pay, Shopify, and Amazon, which could further accelerate its market presence.
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