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Investing.com -- TD Cowen initiated coverage on Affirm Holdings (NASDAQ:AFRM) Inc with a Buy rating and $50 price target, citing the company’s robust platform, marquee e-commerce partners, and improving funding profile as key drivers of long-term growth and profitability.

The price target implies a valuation of approximately 23 times the firm’s estimated 2026 adjusted EPS of $2.24, based on a peer-derived PEG multiple across fintech and credit card lending sectors.

Affirm, one of the top-performing BNPL brands in the U.S., offers a full suite of point-of-sale lending products and likely the most pro-consumer practices in the industry, as per the experts.

They highlighted Affirm’s early focus on longer-duration loans as a sign of its more seasoned underwriting compared to rivals.

TD (TSX:TD) Cowen also pointed to Affirm’s partnerships with Amazon (NASDAQ:AMZN) and Shopify (NASDAQ:SHOP) as evidence of its operational strength and reach, allowing it to serve both large and small merchants more effectively than peers — supporting the firm’s confidence in Affirm’s medium-term gross merchandise volume (GMV) growth guidance in the low-20% range.

The firm noted Affirm’s strong funding platform, which has historically allowed it to secure better capital market terms than broader consumer lenders. In the current environment, new and existing partners such as Sixth Street and Liberty Mutual have provided incremental funding, a trend TD Cowen sees continuing.

Affirm’s target of less than 5% equity capital required in the long term appears increasingly achievable in a more stable rate and credit backdrop, the note said.

The firm also sees operational efficiencies continuing, with revenue growth expected to outpace expenses, supporting ongoing gains in adjusted profitability. While a weakening job market could slow GMV growth in the near term, TD Cowen believes Affirm is well-positioned to gain market share if the broader lending environment tightens.

Affirm has outperformed nonprime lenders during prior credit stress periods and is structurally positioned for long-term profitability, the analysts concluded.

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