Baird initiated coverage of Affirm Holdings with a Neutral rating and $55 price target, citing strong growth potential for buy now, pay later products but flagging macro and credit risks. The firm described Affirm as the largest U.S. BNPL provider and second largest globally, with the industry representing just 1% of U.S. electronic payments.

Affirm's revenue model relies heavily on merchant fees and interest income, with 35% from merchant fees at 2-8% per transaction and 50% from consumer interest at 25-30% APR. The company's merchant base grew 24% to 377,000 in fiscal 2025, while active consumers rose 23% to 23 million, with 95% of transactions from repeat users.

Baird highlighted potential growth drivers including international expansion, wider adoption of Affirm's debit card, and physical store penetration. However, the Neutral rating reflects valuation near 40x 2026 earnings estimates and sensitivity to retail demand and bad debt trends. The firm warned that Affirm's customer base skews toward low and middle-income borrowers, with average order values of $250-$300 potentially amplifying credit risk during economic slowdowns.