Evercore adds Affirm to its Tactical Underperform list Investing.com -- Evercore ISI added Affirm Holdings (NASDAQ:AFRM) to its Tactical Underperform (TAP) list, citing stretched valuations and the stock’s sharp rally heading into next week’s earnings. Affirm shares have surged 115% since April and 18% since the start of August, making it the best performer year-to-date under Evercore’s coverage. Analysts said the run-up leaves “the risk/reward less favorable heading into next week’s print than it was a few weeks ago.” The broker highlighted that Affirm is trading near its recent peak valuation of high-20s next twelve months (NTM) EV/EBITDA, while management’s traditionally cautious stance limits the likelihood of guidance exceeding consensus estimates. Still, Evercore maintained its Outperform rating on the stock, describing the TAP call as tactical rather than a change in its longer-term view. “We still believe AFRM has the best risk platform in the space and will benefit over the longer-term from penetration in new verticals and geographies as well as product expansion,” the analysts led by Adam Frisch wrote. Investors are awaiting Affirm’s fiscal fourth-quarter earnings on Aug. 28, when management will outline fiscal 2026 guidance. Evercore expects guidance to be broadly in line with consensus, with gross merchandise volume (GMV) seen growing 27% ex-Walmart and revenue less transaction costs (RLTC) margin at 3.9%. The firm noted risks tied to potential GMV declines at Walmart (NYSE:WMT), which accounts for about 5% of Affirm’s volume, after competitor Klarna expanded its OnePay offering. Analysts also pointed to a margin dynamic. Notably, lower Walmart volumes could prove accretive given the partnership’s lower economics, though this might be offset by the continued growth in 0% annual percentage rate (APR) loans. Over the past four quarters, Affirm has averaged a Revenue Less Transaction (JO:NTUJ) Costs (RLTC) margin of 4.1%, above management’s 3-4% target. “We expect a 3.9% RLTC margin for FY26 (down 14bps YoY and in line with consensus) but note that could prove a little conservative with continued execution,” analysts said. With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Sure, there are always opportunities in the stock market – but finding them feels more difficult now than a year ago. Unsure where to invest next? One of the best ways to discover new high-potential opportunities is to look at the top performing portfolios this year. ProPicks AI offers 6 model portfolios from Investing.com which identify the best stocks for investors to buy right now. For example, ProPicks AI found 9 overlooked stocks that jumped over 25% this year alone. The new stocks that made the monthly cut could yield enormous returns in the coming years. Is WMT one of them?

Click Subscribe #Investing #StockMarket #Affirm #Evercore #TacticalUnderperform