Morgan Stanley Names Affirm Top Pick as Private Credit Fears Recede

Affirm shares rally as analysts anticipate upward estimate revisions. Morgan Stanley analyst James Faucette has named the company a Top Pick with an Overweight rating and a $76 price target. The call follows a period of pressure on fintech stocks driven by investor anxiety that redemptions at private credit funds, specifically Stone Ridge Asset Management’s Alternative Lending Risk Premium Fund, would spill over into the fintech sector.

Faucette argues the market has mispriced Affirm’s funding risk. The company onboarded AB CarVal, adding $600 million in forward flow capacity, and its latest securitization was 6x oversubscribed. Average funding costs have declined from 7% in Q3 FY2025 to 6% in Q2 FY2026, while equity capital required as a percentage of total platform portfolio is expected to remain below 5%.

Operational momentum supports the bull case. Affirm’s Q2 FY2026 revenue rose 30% year over year to $1.123 billion, beating consensus by 6%. Gross merchandise volume (GMV) rose 36% to $13.8 billion, while operating income rose to $117.6 million. Affirm Card GMV nearly tripled to $2.2 billion in Q2 FY2026, with active cardholders more than doubling to 3.7 million.

Citi analyst Bryan Keane added the stock to his upside 90-day catalyst watch and raised his price target to $100. The central inflection point is the Affirm 2026 Investor Forum on May 12, where Morgan Stanley expects the company to raise its GMV, margin, and EPS targets.