Affirm Holdings on Wednesday won an upgrade from Morgan Stanley while Barclays initiated coverage of Shift4 Payments with an overweight rating. Affirm stock jumped, while shares of Shift4 edged higher.
Some financial technology stocks, notably PayPal Holdings, are rebounding in 2024, but investors should be cautious on the sector. The biggest IBD group of fintech stocks ranks a weak No. 121 out of 197 industry groups tracked.
Further, Barclays analyst John Coffey initiated coverage of Shift4 with an overweight rating and a price target of $120.
"We believe Shift4's 25%-plus net revenue growth rate and 49% EBITDA margins, plus an exclusive global partnership with SpaceX's Starlink broadband service, can reward investors over the long term," Coffey said.
Meanwhile, Morgan Stanley analyst James Faucette upgraded Affirm to equal-weight from underweight.
"We're stepping to the sidelines as more compelling offers for higher income spenders coupled with lower regulatory risk likely improves future earnings potential, especially as the company continues to develop sustainable underwriting and customer engagement capabilities," Faucette said in a report.
On the stock market today, Affirm stock gained more than 4% to 43.15. Shift4 stock rose more than 1% to 93.13. Meanwhile, PayPal stock moved up a fraction to 81.48.
Affirm Stock Rebounds From 21-Day Line
In August, Affirm stock jumped on a rosy fiscal 2025 outlook. Also, Affirm stock hit a 52-week high of 47.98 on Sept. 19, then pulled back. Affirm stock flashed a buy signal Tuesday as it rebounded from the 21-day moving average.
Overall, Affirm stock has retreated 14% in 2024 after outperforming last year, while Shift4 stock is up 23%. Shift4 stock rallied on a second quarter earnings beat.
Meanwhile, Shift4 stock seems extended.
Susquehanna Financial initiated coverage of Affirm stock on Sept. 20 with a "positive" rating and 52 price target.
"With various lanes of growth that include rapidly broadening merchant acceptance and a high-velocity funnel of new consumer accounts coming on file, we are generally constructive on AFRM as a 'new way to pay'," said Susquehanna analyst James Friedman in a report.
"While we worry about cyclicality and incumbent responses, we think the medium-term accelerators of merchant acceptance, especially of the AFRM card, will sustain high growth above consensus."
PayPal Stock Rebounds, Square Struggles
Meanwhile, Oppenheimer initiated coverage of Shift4 stock on Sept. 30 with an outperform rating and 109 price target.
"Shift4's integrated payments capabilities and M&A strategy should continue to drive share gains in its core verticals, growth in new verticals and expansion internationally," said analyst Rayna Kumar in a report.
Also, PayPal stock has gained 33% in 2024 under new Chief Executive Alex Chriss, a former Intuit executive. He took the helm in late September 2023. Chriss has launched new product initiatives. But PayPal stock is extended.
Square-parent Block continues to struggle. Square stock has dropped 12% in 2024.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
