"Buy now, pay later" firm Sezzle extended a rally to record highs Thursday after an analyst started coverage with an outperform rating on the stock, which is already one of the year's best performers.
Analyst Rayna Kumar also gave a price target of 168 on Sezzle stock, about 22% below Thursday's midday quote at around 137.
"Sezzle's proprietary underwriting process stands out, given its behavior-based risk assessment and ability to adjust credit limits within contracts, instead of denying loans," the analyst wrote in a report issued earlier Thursday.
This allows Sezzle to balance risk while providing more-inclusive "buy now, pay later" services. A recession, however, is a risk to consider for an otherwise positive outlook, the analyst added.
"We believe Sezzle's 2025 financial guidance of 60%-65% top-line growth and $3.25 adjusted EPS is beatable, and provides a buying opportunity despite its strong (year to date) performance," Kumar added.
Analysts' consensus earnings estimate for the current quarter is 58 cents a share, an increase of 60%, according to FactSet. The full-year EPS estimate is $3.26, for an increase of 77%. Second-quarter revenue is expected to climb nearly 70% to $94.9 million, and up 63% to $441.8 million for all of 2025.
Sezzle went public in an August 2023 direct listing, the same year it turned profitable. As of March 31, the company counted 2.7 million active consumers with $2 billion in merchandise volume.
Sezzle stock has an IBD Composite Rating of 99, the highest possible. It's higher than competitors such as Affirm and PayPal.
Sezzle Stock Sizzles
Sezzle stock has already shot up 228% so far this year, and it's on track for a 10th straight up week. Shares gapped out of a double-bottom base on May 8, after Sezzle easily beat first-quarter revenue and profit expectations. The company raised its full-year guidance, too.
The stock is up about 130% from the 59.76 buy point. To be sure, investors who bought around last month's breakout can take some profits. Although there are no clear sell signals on the chart, shares are 178% above the 200-day moving average and 85% above the 50-day moving average, according to IBD MarketSurge. At such a stretched level, a pullback would not be surprising.
Sezzle stock has a 21-day average true range (ATR) of 7.31%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names such as Sezzle stock.
