Shares of Affirm Holdings Inc. rose more than 9% in trading on Friday after an analyst cheered the company’s positioning despite recent pressure on the name and the broader buy-now-pay-later category.

While Affirm faces new competition in the BNPL industry from Apple Inc. AAPL,
+1.15%,
Announcing plans to let Apple Pay users spread purchases over interest-free installments in a keynote presentation earlier this month, DA Davidson’s Chris Brendler wrote that he is “increasingly convinced that Affirm AFRM,
+9.45%
is the long-term winner in this space.”

Affirm shares have fallen 28% over the past month as the S&P 500 SPX,
+0.22%
has dropped 8%. Brendler said he’s “not surprised by the recent underperformance as the market seems to be increasingly pricing in a recession, as well as the growing potential for further stress in capital markets,” plus there is risk stemming from the Apple’s entry into the world of BNPL.

But Brendler also believes macroeconomic pressure may “reduce competition” in the market, while Affirm has advantages in underwriting and financing, and argues investors are not giving it enough credit.

“While it is difficult to predict where the economy is headed, we strongly believe that AFRM’s remarkable growth trajectory will continue,” he added.

See also: Why battered fintech stocks may be worth a new look, according to this analyst

Brendler highlighted that BNPL competitor Klarna, which is based in Sweden, reportedly plans to raise money at a substantially lower valuation than last year, according to The Wall Street Journal. (A Klarna spokesperson told MarketWatch that the story “is pure speculation and we do not comment on fundraising or valuation speculation.”)

“Klarna may have missed the window to [go] public and its growth could decline as a result,” Brendler wrote.

As for Apple, Brendler offered that the consumer electronics giant’s interest in BNPL is “great support” for the payment type. In his opinion, Apple’s entry could help fuel further growth in BNPL, although he noted that the two companies will offer different types of installment products: Apple plans to allow short-term, interest-free loans, while Affirm “specializes in Lending. at longer terms, financed by the consumer.” Affirm loans can earn interest.

Read: Apple’s buy now, pay later launch is ‘obvious’ but likely ‘modest’ risk to incumbents, says analyst

“With almost all of the competition focused on the short end, AFRM dominates the consumer-funded space and its Split Pay product is currently only offered through Shopify, so it won’t be competing directly with Apple Pay, at least initially,” he wrote. . “Although competition is likely to continue to expand,” including from PayPal Holdings Inc. PYPL,
+2.34%,
“The sudden change in risk appetite and the continued lack of regulatory clarity will likely slow the influx of new entrants.”

Read: PayPal Expands BNPL Offerings With Monthly Payment Option

Also, given that Apple plans to handle its own collection and underwriting, Brendler believes the company will “tread carefully” and doubts that Apple will undertake a “rapid expansion of products beyond BNPL in the short term.”

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