10:40 AM EDT, 10/09/2024 (MT Newswires) -- Affirm Holdings ( AFRM ) shows promise in attracting higher-income consumers drawn by better distribution, promotional offers including 0% and low-interest financing options and pricing strategies, Morgan Stanley said in a note on Wednesday.

"Putting all those tools together can attract higher-income users, where we would expect Affirm to expand its offerings to better retain those higher-income customers," according to the note.

Morgan Stanley said that Affirm's availability within Apple Pay, which typically attracts younger and higher-income users, is anticipated to add $1.94 billion in incremental volumes during fiscal year 2026 and this integration will drive substantial growth.

The company's increased efforts to engage merchants and manufacturers in offering promotional financing, particularly 0% interest offers, are seen as key to capturing the attention of higher-income consumers, Morgan Stanley added.

The regulatory risk for Affirm and the broader buy-now-pay-later sector has lessened, as the Consumer Financial Protection Bureau has taken a favorable stance on companies that demonstrate compliance, the firm said.

Morgan Stanley upgraded Affirm's rating to equal-weight from underweight and raised the price target to $37 from $20.

Affirm shares were 6% higher in recent trading.

Price: 43.26, Change: +2.11, Percent Change: +5.12