As previously reported, Compass Point upgraded Affirm (AFRM) to Neutral from Sell with a price target of $61, up from $20. The firm’s previous valuation “underappreciated” Affirm’s ability to re-accelerate growth, which has compounding benefits as the company benefits from “very strong operating leverage,” the analyst tells investors. The firm now models Affirm’s adjusted operating income margin increasing to 30% in FY27, compared to its 24.0% estimate for FY25, driven by significant sales and marketing expense leverage as past marketing expenses drive recurring member engagement and average transactions per member, the analyst added.
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