AFRM: A Rise to TP$53 is Coming with Global Easing Cycle unfolds
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1 Perspective of Macro factor: AFRM is one of leading provider in credits lender platform. There’s huge tailwinds for lenders in global easing cycle. When checking the high yield spread, it continues to narrow to hint a easing cycle ahead.
2. Perspective of Micro factor: AFRM has one of least delinquency rates for a loan provider with 43% Non-prime receivables . 30 days delinquency rates only for 2.3%, 60d for 1.4%, 90d for only 0.6%. For the same ties(44% non-prime receivables), other is 6% for 30 days. Their RLTC grew 38% YoY.
3.Perspective of profit duration: the adjusted operating margin was 14% Vs -2% Q323. 75% of the increase was due to increase of RLTC. With rate cuts, their RLTC will increase more to contribute a higher OM, which is the key of AFRM performance.
4.Perspective of Technical: Chart for a potential rise to 54TP for first target.
Based on all these, Strong bullish on AFRM.
Disclaimer: All of the posts or thoughts or charts here are just view of my own, not suggestions for your decision. Do your own DD before your decision.
2. Perspective of Micro factor: AFRM has one of least delinquency rates for a loan provider with 43% Non-prime receivables . 30 days delinquency rates only for 2.3%, 60d for 1.4%, 90d for only 0.6%. For the same ties(44% non-prime receivables), other is 6% for 30 days. Their RLTC grew 38% YoY.
3.Perspective of profit duration: the adjusted operating margin was 14% Vs -2% Q323. 75% of the increase was due to increase of RLTC. With rate cuts, their RLTC will increase more to contribute a higher OM, which is the key of AFRM performance.
4.Perspective of Technical: Chart for a potential rise to 54TP for first target.
Based on all these, Strong bullish on AFRM.
Disclaimer: All of the posts or thoughts or charts here are just view of my own, not suggestions for your decision. Do your own DD before your decision.
Nota
10y fell below 4.2% finally, which is a strong hint to Fed Sep rate Cut. 10y-2y is now the least inverted in two years Both contribute to tailwinds for AFRM.Nota
10y fell below 4%, big downside move after Fed meeting July, which hints sep rate cut is a base case from here and there maybe a scenario of severe cuts these year. Still strong bullish on AFRM.
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