Is Affirm stock a buy or sell as Piper Sandler issues a neutral rating?
- Affirm shares extended declines on Tuesday after receiving a neutral rating from Piper Sandler.
- The firm thinks there is limited upside potential amid rising credit card delinquency rates.
- The Buy Now Pay Later stock trades at a steep P/S ratio of 44.05.
On Tuesday, Affirm Holdings Inc. (NASDAQ:AFRM) shares edged slightly lower, extending Monday’s declines after Piper Jaffray analysts initiated coverage with a Neutral rating.
The stock is now down more than 5% from Friday’s close. Analyst Kevin Barker thinks the Buy Now Pay Later (BNPL) industry could suffer from increasing credit card delinquency rates.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
The report comes at the back of a positive survey published over the weekend that showed consumers will be using BNPL services more during the holiday season.
The analyst sees consumer lenders experiencing rising delinquency and net charge-off rate in FQ4 2021 and throughout 2022 as consumer credit returns to pre-pandemic levels.
Is Affirm overvalued?
From an investment perspective, Affirm Holdings shares trade at a steep price-sales ratio of about 44.05, thus making the stock too expensive for value investors. In addition, analysts expect its bottom line to worsen by more than 208% this year, before bouncing back by 37.80% next year.
Therefore, Affirm stock does not look like an ideal option for short-term investors.
However, those willing to overlook the short-term turbulence could benefit significantly in the long term amid the growing popularity of BNPL services.
Technically, Affirm shares seem to be trading within a descending channel formation in the intraday chart. However, the stock has recently bounced off the key support to retest the trendline resistance.
Therefore, investors could target extended pullbacks at about $120.31, or lower at $107.52, while $145.37 and $157.74 are resistance levels.
Where to buy right now
To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use: