Needham starts Affirm at Hold on high valuation and stock-based compensation

As previously reported, Needham initiated coverage of Affirm with a Hold rating. The firm is positive on the company’s diverse product suite and expects the market for “buy now, pay later”, or BNPL, services to generate healthy growth. Needham rates the stock at Hold however due to a combination of valuation at 32-times its expected FY26 EPS, elevated stock-based compensation expense at 46% of last-12-months revenue, and a growing mix share of interest and other lending-related income that may make significant multiple expansion challenging, the analyst tells investors in a research note.