Bank of America reboots Affirm stock price target after earnings

Bank of America upgraded its stock price target for Affirm to $88, up from $82, following the company’s fiscal third-quarter 2026 earnings report released May 7. The upgrade reflects confidence in Affirm’s execution, with the firm citing stronger gross merchandise volume (GMV) of $11.6 billion and revenue less transaction costs (RLTC) of $498 million—both exceeding analyst expectations. Affirm’s results showed a 35% increase in GMV, a 33% rise in total revenue to $1.039 billion, and a 62% jump in adjusted operating income to $281 million. Operating margins improved to 27%, up from 22% a year earlier, driven by disciplined underwriting, cost control, and healthy consumer demand. Bank of America noted these trends as evidence of Affirm’s growth translating into more durable earnings. Affirm Card emerged as a key growth driver, with GMV surging 146% to $2.1 billion and active cardholders more than doubling to 4.4 million. The card’s attach rate rose to 17%, up eight percentage points year-over-year, signaling stronger recurring revenue potential. Direct-to-consumer GMV grew 48% to $3.7 billion, while total transactions increased 45% to 45 million, reflecting broad growth across consumers, merchants, and transaction frequency. Bank of America also highlighted Affirm’s improving operational efficiency, citing limited headcount growth, high revenue per employee, and AI-driven productivity gains. These factors support better operating leverage as the company scales. The firm’s shareholder letter emphasized a cleaner path toward medium-term profitability, reinforcing Affirm’s shift from rapid GMV growth to sustainable earnings power. The updated $88 price target implies a 37.5% upside from Affirm’s $64.01 share price at the time of the report. Bank of America maintained its 'Buy' rating, arguing that Affirm’s latest results demonstrate momentum in monetization and a more recurring revenue model, reducing reliance on transaction-based growth alone.