Affirm (AFRM.US) shares rose sharply this week after being upgraded by three Wall Street giants

Shares of Affirm Holdings (AFRM.US) surged this week after three Wall Street firms raised their ratings on the "buy now, pay later" company.

Wells Fargo (WFC.US) was the latest to turn bullish on Affirm, with analysts led by Andrew Bauch upgrading the stock to "overweight" from "neutral" and raising its price target to $52 from $40.

Affirm's shares rose more than 12% on Friday to close at $47.08, according to Dow Jones Market Data, and have climbed three of the past four days, up 20% in total.

The Wells Fargo team sees multiple growth catalysts driving the stock higher over the next year, including the payment partnership announced last month with Apple (AAPL.US) and lower interest rates, which would spur growth and lower Affirm's financing costs.

Analysts noted that Affirm has "demonstrated its ability to win market share" in the e-commerce checkout market over the years.

Affirm expects to achieve operating profit under generally accepted accounting principles in the fourth quarter of fiscal 2025, Wells Fargo said, which would help justify its high valuation: Affirm is trading at 52 times its estimated earnings per share in 2026, compared with 6 times for fintech peer Ally Financial and 16 times for credit card giant American Express.

"With GAAP profitability on the horizon, the valuation finally becomes more attractive," the analysts said.

The upgrade from Wells Fargo came after earlier upgrades this week from BTIG and Morgan Stanley (MS.US). BTIG raised its rating on Affirm to "buy"; Morgan Stanley raised its rating to "equal weight" from "underweight," citing the company's efforts to target high-income consumers.

Wall Street's view of Affirm has become more positive in recent months. Currently, 45% of analysts rate the stock "buy," according to FactSet, up from 28% in April.