Klarna shares: Wall Street analysts mostly bullish

Investing.com -- Klarna shares rose are trading higher on Monday after multiple firms initiated coverage on the Swedish fintech, highlighting its global scale and long-term growth potential in the fast-expanding “buy now, pay later” (BNPL) sector.

UBS began coverage with a Buy rating and a $48 price target, describing Klarna as a “scaled two-sided network operating in a fast-growing BNPL market.”

The bank said Klarna’s “mix is shifting toward higher take rate parts of the market,” with interest-bearing loans expected to grow from about 5% of gross merchandise volume in 2024 to 17% by 2028.

UBS added that the shares “offer an attractive entry point alongside potential upside as the BNPL industry gains greater share of overall commerce.”

JPMorgan also initiated at Overweight with a $50 price target, calling Klarna “a fintech pioneer that has grown into an international financing and commerce powerhouse.”

The firm expects the company’s U.S. expansion and “more profitable, longer-duration loans” to support revenue growth above 20% and about 15 percentage points of margin expansion through 2027.

It said Klarna trades “at a healthy discount” to Affirm, offering “an attractive longer-term opportunity to close the gap.”

Keefe, Bruyette&Woods started coverage at Outperform, noting Klarna is a “two-sided platform that brings powerful network effects” for both consumers and merchants.

Bernstein was more cautious, starting at Market Perform with a $45 target, saying Klarna operates in a “sizable” market but questioning whether it is “a new bank or a new-age commerce network.”

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