SoFi stock is in a bull market. Analyst calls it “The Future of US Banking”.
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Andrew Jeffrey, an analyst at Truist Securities, began coverage on SoFi Technologies stock with a buy rating and an $8 target price in a report Friday.
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SoFi Technologies
caused a stir on Friday when analysts at Truist Securities began coverage of the financial services company with a buy rating and an $8 price target.
“We see SoFi as the future of US banking: digital, flexible and always online,” Truist analyst Andrew Jeffrey wrote in a report Friday.
Still, SoFi shares fell 2% to $5.04 in Friday trading. Over the past 12 months, the stock is down 25%.
“We believe long-term growth investors will appreciate SoFi’s robust multi-year organic revenue, earnings before interest, taxes, depreciation and amortization, free cash flow and free cash flow return on equity prospects,” Jeffrey wrote.
Looking at the bigger picture, Jeffrey pointed out that the bank’s start as a lender focused on refinancing student debt — “like many fintechs rely on capital markets funding” — forced them to establish discipline in underwriting and risk management “to to offer acceptable returns on lending”. Partners.” SoFis Acquisition of Technisys SA contributed to turning the bank into a full-service bank in the last year.
As a bank, SoFi has seen a sharp increase in deposits, That amounts to about $10 billion in the first quarter of approx $1.2 billion a year earlierhe continued, “making it a beneficiary of legacy bank deposit outflows,” he continued.
And indeed, the The banking sector faces significant volatility in the last few months, starting with
SVB Financial
,
Parent company of Silicon Valley Bank, closure, continue with
CreditSuisse
fold and agree to be snatched by him
UBS Group
(UBS) and culminated with
Bank of the First Republic
on sale is
JPMorgan Chase
(JPM). Regional banks were on a rollercoaster ride.
Jeffrey discussed how SoFi generates revenue through lending, technology and financial services, calling lending “the most important driver of the economy.”
And while he’s optimistic about the stock, others disagree.
On the 1st of MayAhead of the market open, the company posted a smaller-than-expected loss in the first quarter and SoFi raised its 2023 guidance. However, investors seemed to take the stellar personal lending numbers as a warning of further losses in the future, according to Dow Jones Market Data, the stock fell 12% on the day.
Consumer credit losses are expected to be higher amid recession concerns, and investors appear to be taking the sharp rise in personal credit this quarter as a sign of future losses, Reggie Smith, an analyst at JP Morgan, told Barron’s at the time. In a May 1 note following SoFi’s report, he gave the stock a neutral rating.
Of the analysts polled by FactSet in May, 47% rated SoFi stock as a hold and 53% as a buy.
Write to Emily Dattilo emily.dattilo@dowjones.com
https://www.barrons.com/articles/sofi-stock-buy-wall-street-5c316f90?siteid=yhoof2&yptr=yahoo SoFi stock is in a bull market. Analyst calls it “The Future of US Banking”.
