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Affirm Stock Rises; Mizuho Lifts Target, Morgan Stanley Lauds Checkout

Affirm shares climb as the buy-now-pay-later network draws support from Mizuho and Morgan Stanley analysts.

Affirm  (AFRM) - Get Affirm Holdings Report was climbing Friday after Mizuho analysts raised their price target for the buy-now-pay-later network, while Morgan Stanley was encouraged by the company's recently announced Adaptive Checkout offering.

Shares of the San Francisco company at last check were 3.2% higher at $130.95.

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Mizuho analyst Dan Dolev raised his price target on Affirm to $150 from $110, while affirming a buy rating on the shares, according to the Fly.

Doley said in a research note that the company's "top-of-wallet, primary transacting" Debit+ card should debut on Tuesday. 

The card is expected to offer efficient cash-flow management by tackling everyday spending, which Affirm dubs as the "next frontier" of credit-card unbundling, the analyst said. 

Dolev said he wondered whether the Debit+ card could benefit from the Durbin small-bank high interchange while simultaneously disrupting the $2 trillion regulated debit industry.

The Durbin amendment, which is part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, required the Federal Reserve Board of Governors to cap the debit card interchange fees that large banks charge.

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Separately, Morgan Stanley analyst James Faucette said he was encouraged by the initial results of Affirm's new Adaptive Checkout capability. This enables merchants to give consumers greater installment payment choices at checkout.

Affirm unveiled Adaptive Checkout on Wednesday. The company said in a statement that early access had seen, on average, a 26% increase in cart conversion, a 22% lift in approvals, and a 20% increase in sales, compared with offering monthly payments through Affirm alone.

"If trends hold and the product sees material merchant adoption, Faucette said, "we estimate the expanded offering could be a meaningful contributor to customer acquisition and to our estimates."

The analyst said many may have forgotten that Affirm had previously announced Walmart  (WMT) - Get Walmart Inc. Report as a merchant partner.

He said recent news reports indicate Walmart intended to take advantage of the credit Affirm offers to its customers, both in-store and online, by not offering Walmart’s own layaway service this year. 

The layaway service previously allowed holiday shoppers to pay for purchases in interest-free installments from August to December.

"We think this potential development serves as a positive indicator that AFRM can take greater share of Walmart's $389 billion in estimated U.S. sales in fiscal 2022," Faucette said.

Earlier this month, Affirm blasted Wall Street's fourth-quarter sales estimates and forecast 2022 revenue of more than $1.1 billion.

In August, Affirm unveiled a partnership with Amazon  (AMZN) - Get Amazon.com, Inc. Report, which allows buyers to split purchases for $50 or more into monthly payments on the company's payment network.