2 Financial Technology Stocks to Buy Ahead of Earnings This Week
The financial technology space is expected to benefit from expanding transaction volumes resulting from the widespread adoption of digital means. The ongoing digitization movement, triggered by the pandemic, is a major catalyst for this industry.
Financial technology represents a transformative investment space within a hybrid sector merging finance and technology. The companies in this space offer a variety of services, such as online banking, peer-to-peer payments, insurance, cryptocurrency and cybersecurity, among others.
Investors’ eyes are on two large-cap financial technology stocks are set to report earnings results this week. These are — Affirm Holdings Inc. AFRM and Lyft Inc. LYFT. The combination of a potential earnings beat with a favorable Zacks Rank should drive their stock prices in the near term.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
We have narrowed our search to two large-cap financial technology stocks set to report earnings results this week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better (Rank #1 or 2) and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are anticipated to appreciate after their earnings release. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The chart below shows the price performance of our two picks in the past three months.
Image Source: Zacks Investment Research
Zacks Rank #1 Affirm Holdings has achieved strong revenue growth through diverse income streams, including merchant network fees, interest from loans and virtual card revenues. In fiscal 2024, AFRM’s revenues increased 46.3% year over year. Improving gross merchandise value and the average balance of loans are driving merchant network revenues and interest income, respectively.
Key partnerships with Apple Pay and Hotels.com play a vital role in AFRM’s expansion. Affirm Holding’s advanced machine learning enhances fraud detection and credit risk assessment, improving personalization and efficiency. Plans to expand into the United Kingdom by fiscal 2025 further broaden its geographic footprint. AFRM has an Earnings ESP of +10.11%. The company will report on Nov 7, after the closing bell.
For first-quarter fiscal 2025, the Zacks Consensus Estimate currently shows revenues of $661.39 million, suggesting an improvement of 33.2% year over year. The Zacks Consensus Estimate for the quarter’s EPS has improved 5.3% in the last 30 days.
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