Affirm has been one of the more closely watched names in financial technology as investors weigh whether the buy now, pay later company can turn rapid growth into a more durable profit story. Bank of America came away from the company’s latest quarter with more confidence, raising its price target as the firm pointed to stronger execution, improving monetization, and momentum from Affirm Card.
BofA reiterated its Buy rating on Affirm and raised its price objective to $88 from $82, according to the BofA note given to TheStreet. The new target implied 37.5% upside from the $64.01 share price listed in the report, with the firm arguing that the company’s latest results showed a cleaner path toward medium-term earnings power.
Affirm reported fiscal third-quarter 2026 results on May 7 for the quarter ended March 31, 2026, and said the results included a shareholder letter furnished to the Securities and Exchange Commission on Form 8-K. The company also filed its quarterly 10-Q on May 7, with a document date of March 31, 2026.
Affirm’s quarter gives BofA more confidence
The BofA call followed a quarter that the firm described as a strong beat and raise, with results coming in ahead of expectations across gross merchandise volume, revenue less transaction costs, and operating income. In the BofA note given to TheStreet, the firm said Affirm posted GMV of $11.6 billion and RLTC of $498 million, above BofA’s estimates of $11.1 billion and $461 million.
Affirm said GMV grew 35% to $11.6 billion, revenue rose 33% to $1.039 billion, and RLTC increased 41% to $498 million during the quarter.
Affirm said adjusted operating income was $281 million, up 62% from $174 million a year earlier, while adjusted operating margin rose to 27% from 22% in the prior-year period.
BofA said Affirm’s results were driven by healthy consumer demand, disciplined underwriting, improved monetization trends, and cost control, giving the firm more confidence that growth is translating into better earnings durability.
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Affirm Card becomes more pivotal
The quarter also gave BofA another piece of evidence that Affirm’s business may be becoming more recurring. Affirm Card has become a more important part of the company’s growth story, and BofA highlighted the product as a key part of the company’s momentum.
Affirm said direct-to-consumer GMV grew 48% to $3.7 billion, driven primarily by Affirm Card GMV, which grew 146% to $2.1 billion. Active cardholders more than doubled year over year to 4.4 million, while card attach rate increased to about 17%, up eight percentage points from a year earlier.
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The firm said the accelerating card flywheel supports a more recurring and durable monetization profile. That is an important distinction for a company that has often been judged mainly on GMV growth and consumer credit risk.
The company also said total transactions rose 45% to 45 million, active consumers increased 22% to 26.8 million, and active merchants grew 44% to 515,000 as of March 31. Those figures suggest that Affirm’s growth was broad across consumers, merchants, and transaction frequency.
BofA sees operating leverage building
BofA’s updated price target also reflects the firm’s view that Affirm is becoming more efficient as it scales. The note pointed to limited headcount growth, high revenue per employee, and AI-driven productivity as factors supporting better operating leverage over time.
Affirm’s shareholder letter also leaned into that theme. The company said more than 70% of RLTC dollar growth flowed through to adjusted operating income, while operating margin increased 10 percentage points to 9% of revenue.
AI-related spending remains immaterial to Affirm’s profit and loss statement, running in the low-single-digit millions per quarter, according to the BofA note given to TheStreet. The firm also said management framed AI as a way to support faster product development, better conversion, and sustained unit economics discipline.
Affirm’s outlook gave investors another reason to watch the next few quarters closely. The company guided for fiscal fourth-quarter GMV of $13.15 billion to $13.45 billion, revenue of $1.08 billion to $1.11 billion, and adjusted operating margin of 27.5% to 29.5%. For fiscal 2026, Affirm guided for GMV of $49.265 billion to $49.565 billion and revenue of $4.175 billion to $4.205 billion.
The next catalyst is already on the calendar
BofA also pointed to Affirm’s investor forum as a potential catalyst for the stock. The company said it would host the event on May 12 in New York, where management planned to provide updates on its vision, commercial and product initiatives, and medium-term financial framework.
That event could give investors more clarity on the company’s margin path and longer-term earnings power. The firm said any tightening or upward revision to long-term margin targets would further validate the improving earnings trajectory and strengthen the bull case, according to the BofA note given to TheStreet.
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