Goldman Sachs says this beaten-down buy now, pay later stock is primed to rally 40%

This buy now, pay later stock has the best-in-class fundamentals that could drive further upside margin, according to Goldman Sachs.

Affirm 's best-in-class fundamentals give it a leg up above competitors, according to Goldman Sachs. Analyst Will Nance assumed coverage of the buy now, pay later company with a buy rating. His price target of $42 implies upside of more than 40% from Friday's close. Shares of Affirm have plunged 35% this year. However, Nance expects "strong growth rates to support the company's premium valuation in the intermediate term.

Nance also emphasized Affirm's differentiated approach to underwriting as a company strength, especially versus its peers, giving it a leg up when it comes to managing credit outcomes. "AFRM's credit losses in the 7% range are comparable with subprime losses at incumbents, but have been much more stable recently while the industry has seen credit normalization in the wake of the pandemic," the analyst said.

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