Analysts have begun coverage of Klarna after a period of silence. What do they advise investors?

Several investment banks have started covering shares of one of the most expensive European fintech startups Klarna after a 25-day period of silence. October 6 was the end of the period, when after the listing the organizers of the offering were prohibited from publishing reports and recommendations to avoid conflicts of interest and influence on the share price in the first weeks of trading. Investment banks are generally positive about the prospects for the startup, which operates on a "buy now - pay later" model. Some, however, warn that rising costs could put pressure on Klarna's short-term profitability.

- UBS initiated coverage of Klarna shares with a Buy recommendation and a $48 target price - up 18% from the last close, CNBC reports. According to the bank's analyst, at current levels, the stock presents investors with an "attractive entry point" and has the potential for further upside as the buy now, pay later (BNPL) sector takes an increasingly significant share of the overall retail mix.

- Deutsche Bank also assigned a "buy" recommendation with a similar target. The bank's expert explained that his investment thesis on Klarna is based on three key factors: first, continued growth in consumer demand for BNPL services; second, accelerating revenue growth due to active expansion into the U.S. market; and third, expected margin growth expected in fiscal 2026 and beyond.

- JPMorgan assigned an Overweight rating equivalent to a "buy" recommendation and set a target price of $50 per share (+23% from last close). "Klarna is a fintech pioneer that has evolved into an international leader in finance and commerce (...). Today, Klarna is aggressively expanding its presence in the U.S. market while shifting its focus to higher-margin credit products with extended maturities. At the same time, the stock is trading at a significant discount to its main competitor, Affirm, creating an attractive long-term opportunity to gradually narrow that gap. However, it will take several quarters of solid operational realization to achieve this," said a JPMorgan analyst in a note quoted by CNBC.

- Bank of America also advised to buy the company's shares with a target price of $51. The analyst noted that Klarna offers consumers a convenient and transparent way to finance purchases, and among the key investment advantages he highlighted: a significant market potential, estimated at $2.9 trillion by 2030, primarily due to the growth of presence in the U.S., an expanding network of trading partners, strong credit metrics, an attractive financing structure, and a diversified product portfolio.

- Morgan Stanley initiated coverage of Klarna shares with a neutral Equalweight rating ("market perform") and a target price of $43 - up 5% from the last close. The investment bank recognized that Klarna is well positioned for sustainable revenue and margin growth, gradually shifting to more profitable products while building on its strong brand and broad international presence. At the same time, Morgan Stanley noted the risks of implementing Klarna's strategy to transform its business model from a classic short-term BNPL format to a more comprehensive and profitable financial ecosystem. According to him, the main threats are related to access to capital markets, credit risk management and competition for a more affluent clientele in the long term.

- Rothschild & Co Redburn also gave Klarna's securities a Neutral rating and a $46 target. The analyst noted that the company's growth depends on the successful expansion of business in the U.S. and the launch of new products. He, as well as Morgan Stanley, warned about risks of realization of Klarna's strategy, especially in the context of expansion of the new line of Fair Financing, designed for longer terms and large purchases, amid concerns about the mood of American consumers.

On the background of predominantly positive recommendations during the trading on October 6, Klarna securities soared by 6.6% to $43.4. The company held its IPO on September 10. On the first day of trading on the NYSE, the stock rose 15% to close at $45.82 per share. Since then, however, the company's market value has fallen 6.5%.

This article was AI-translated and verified by a human editor