After announcing that it would fire some 500 employees in February, Affirm shares popped, but they have been unable to hold that gain. Shares are down by about a third since then. What the company needs to stop wild swings in its share price is a quarterly report that at least meets expectations. A solid beat would be even better.
Of 18 analysts covering the stock, only four have a Buy or Strong Buy rating, and nine others rate it at Hold. At a recent share price of around $14.00, the implied upside based on a median price target of $14.50 is 3.6%. Based on the high price target of $24.00, the upside potential for the stock is 71.4%.
Analysts expect Affirm to report fiscal fourth-quarter revenue of $406.08 million, which would be up 6.6% sequentially and by 11.5% year over year. They also expect the company to report an adjusted loss per share of $0.68, worse than the prior quarter’s loss of $0.57 per share and the year-ago loss of $0.65 per share. For the full 2023 fiscal year ending in June, Affirm is expected to post a loss per share of $3.03, worse than last year’s loss of $2.51 per share, on revenue of $1.55 billion, up 14.7%.
Affirm is not expected to post a profit in 2023, 2024 or 2025. The enterprise value to sales multiple is expected to be 5.1 in 2023. Based on average estimated sales of $1.92 billion and $2.4 billion for 2024 and 2025, respectively, the multiple is 4.1 for 2024 and 3.3 for 2025. The stock’s 52-week trading range is $8.62 to $31.42. Affirm does not pay a dividend. Total shareholder return for the past year was negative 51.78%.
Gap
Apparel retailer Gap Inc. (NYSE: GPS) has seen its share price drop by about 4.8% over the past 12 months, including a drop of more than 15% for the year to date. The stock put up its 52-week low after reporting April-quarter results, and since then the shares have added 31%. A new CEO, Richard Dickson, moved into the corner office on Tuesday, bringing with him the hope of success similar to his success at Mattel when he is credited with reviving Barbie. Gap needs the same kind of magic.
Analysts continue to be wary of the stock, with 13 of 21 having a Hold rating and just four others rating it at Buy or Strong Buy. At a share price of around $9.50, the upside potential based on a median price target of $10.45 is 10%. At the high target of $23.50, the implied gain is about 1.47%.
Second-quarter fiscal 2024 revenue is forecast to come in at $3.59 billion, up 9.6% sequentially but 7.0% lower year over year. Analysts are forecasting adjusted EPS of $0.10, up from $0.01 in the prior quarter and from $0.08 in the year-ago quarter. For the full fiscal year ending next January, analysts expect EPS of $0.65, up from a loss of $0.40 in fiscal 2023, on sales of $14.93 billion, down 4.4%.
Gap stock trades at 14.8 times expected 2024 EPS, 11.1 times estimated 2025 earnings of $0.86 and 9.8 times estimated 2026 earnings of $0.98 per share. Its 52-week trading range is $7.22 to $15.49. Gap pays an annual dividend of $0.60 (yield of 5.85%), and the total shareholder return for the past year was 1.38%.
Marvell
Chipmaker Marvell Technology Inc. (NASDAQ: MRVL) has seen its share price rise by 17% over the past 12 months. For the year to date, the stock is up nearly 61%, in no small part due to Marvell’s blowout first quarter and the halo provided by AI and Nvidia.
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