Installment-payment broker Affirm (NASDAQ:AFRM) is sometimes known as a specialist in the “buy now, pay later” (BNPL) niche market. Folks who own AFRM stock are, oftentimes, counting on the emerging BNPL industry to grow over time.

So far, their bets on Affirm have paid off. The share price is surging – though this might set off alarm bells among contrarian investors.

Is AFRM stock moving too far, too fast? Not necessarily, as there’s data showing that Affirm is growing its network of merchants and consumers, as well as its revenues.

And now, there’s a prominent big-bank analyst with some highly positive commentary on Affirm. It’s just the icing on the cake as the bull thesis for Affirm continues to strengthen in 2021.

A Closer Look at AFRM Stock

On Feb. 11 of this year, AFRM stock hit a 52-week high (at that time) of $146.90. That’s pretty impressive, considering that Affirm had previously priced its shares at $49 a piece, which was already above the target range of $41 to $44.

After the initial pop, however, came a precipitous drop. This seems to be a pattern with many initial public offering (IPO) stocks lately.

It was a rough summer as AFRM stock slid to $50 and then wobbled around for a while. Traders who panic-sold during this time would soon probably regret their decision, though.

Call it a miracle if you’d like, but after the summer ended, the buyers swept the Affirm share price back towards its all-time high in the fall.

AFRM stock is hovering near $158. It’s a comeback story in the making.

So now, let’s delve a little deeper into a business that’s poised to change the way sellers sell, and the way payers pay at checkout.

Growing and Innovating

Being in the BNPL space is really just a buzzword way of saying that Affirm offers point-of-sale loans.

It’s great for the customers, as Affirm enables many of them to finance online purchases and pay them back in monthly installments without the harsh impact of compounding interest.

Affirm works with around 6,500 retailers, and is used by over 6.2 million people (according to the company).

The company recently issued a quarterly report that highlighted 97% year-over-year growth in active consumers.

On top of that, on a year-over-year basis, Affirm produced 106% growth in gross merchandise volume (GMV); a total revenue increase of 71%; and a 412% expansion in the company’s active merchants count.

Despite those astounding stats, Affirm isn’t just resting on its laurels. The company continues to innovate with its just-launched Adaptive Checkout product.

This platform uses a smart decision engine to “deliver personalized payment options based on the transaction size as well as a real-time underwriting decision.”

A Clear Bright Spot

There’s already data to demonstrate Adaptive Checkout’s benefits.

Compared to offering monthly payments through Affirm alone, merchants using Adaptive Checkout in early access have seen, on average:

• A 26% increase in cart conversion
• A 22% rise in approvals
• A 20% improvement in sales

Perhaps it’s Affirm’s transformative spirit that prompted analysts at Bank of America (BoA) to identify Affirm as a standout among BNPL purveyors.

In a note published on Oct. 12, the BoA analysts lifted their price target on AFRM stock from $119 to $160.

Calling Affirm “the clear bright spot,” the analysts observed that while “all the other BNPL vendors saw deceleration in September app downloads and [monthly active users] growth compared to August and 1H, AFRM was the only provider that saw growth accelerate in both metrics.”

It’s hard to argue with the Wall Street experts when they’ve got data-driven ammo like that.

With that, the BoA analysts are bracing for Affirm to deliver 30% top-line growth “for at least the next several years driven by growing BNPL market and new product introductions.”

The Bottom Line

There’s no need to worry that the rally in AFRM stock is premature. Really, it’s a comeback story that should prompt more investor interest in Affirm.

So, contrarians can relax and even consider a long position in the stock. After all, BoA’s affirmation makes Affirm look better than ever.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.