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Benzinga
Benzinga
Business
Anusuya Lahiri

Here's How This Analyst Views Fintech Stocks Affirm, Toast Amid Pandemic Recovery

  • MoffettNathanson analyst Eugene Simuni rolled out coverage of six stocks in the Fintech sector. 
  • Simuni initiated coverage of Toast Inc (NYSE:TOST) with a Sell rating and $19 price target (10.2% downside) and Affirm Holdings Inc (NASDAQ:AFRM) with a Neutral rating and $50 price target (14.1% upside). 
  • He thinks that Toast and Affirm are two Fintech disruptors whose longer-term growth trajectories are likely to disappoint compared to the anticipations indicated in current valuations. 
  • Toast faces a challenging competitive environment from other "buy now, pay later" (BNPL) providers, which is likely to create "downward pressure" on its profit yield.
  • Other headwinds include the potential of higher financing costs and deterioration in the U.S. credit environment.
  • While Affirm is a leader in the U.S. BNPL market, the niche value proposition of BNPL services and rapidly compressing yields restricted its growth runway.
  • Meanwhile, the analyst noted that digital banks continue to capture market share from traditional financial service providers, like banks and credit unions that are struggling to keep up with technology demands.
  • Price Action: TOST shares closed lower by 11.9% at $21.19, and AFRM lower by 8.09% at $43.84 on Tuesday.
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