Fintech company SoFi Technologies (SOFI) - Get SOFI TECHNOLOGIES INC Report is undervalued, according to Wall Street. SOFI’s “strong buy” rating, supported by the company’s solid fundamentals and growth prospects, combines with popularity on the main discussion forums and a large pullback of 28% since the June 2021 IPO to form an interesting investment opportunity.
Today, Wall Street Memes presents the latest takes from analysts on SOFI stock.
(Read more from Wall Street Memes: Corsair Stock Has 50% Upside, Says Wall Street)
Wall Street consensus on SOFI stock is very bullish. With a strong buy recommendation based on five reports in the last two months, SOFI has an average price target of $24.50, for 47% upside from current levels.
- Rosenblatt Securities analyst Sean Horgan is the most bullish of them all. A month ago, he maintained his buy recommendation on SoFi Technologies and predicted a price of $30, which is approximately 79% above the share’s current value at last check.
- Mizuho Securities analyst Dan Dolev is the second most bullish. He initiated his coverage on SoFi with a buy rating and a price target of $28 that suggests 67% upside potential. According to the analyst:
"SoFi is a one-stop shop digital financial services firm that is in the midst of a powerful transition to a full-fledged mobile-first, super-app neo-bank with in-house next-gen issuing capabilities (Galileo). Our bottom-up analysis shows a path to a 40% sales CAGR by 2025, primarily driven by a 150% CAGR in financial services and 40-50% in Galileo. We value SoFi at 9x 2023 sales, implying a PT of $28. We expect the ongoing trend of improving fundamentals to drive the multiple toward peers such as SQ (14x) or MQ (25x).”
- Jefferies analyst John Hecht also initiated his coverage recently on the online lender with a buy recommendation and a $25 price target. He projects So-Fi’s success based on the company’s perceived ability to cross-sell financial products to existing users.
“We believe that [the] Flywheel, SoFi’s synergistic business model, will continue to drive significant user growth, product adoption, and margin expansion.”
Hecht sees SoFi becoming profitable within the next three years as losses gradually drop over the period. For the longer term, he expects that SoFi will reach profitability by posting earnings of 20 cents per share in 2024 – still low, for now, to properly justify a price target of $25.
- Oppenheimer analyst Dominick Gabriele is another bull who recommends a buy and sees 37% upside potential at a price target of $23. He added:
“We believe SOFI has a unique position in the market and can adapt its business model to continue its already-strong execution in cross-sell among its current customer base while obtaining new member acquisition. We don't expect results to occur in a straight line, yet believe investors should focus on SOFI's MT/ LT prospects.”
- Credit Suisse analyst Timothy Chiodo is the only one on the fence. The analyst initiated his coverage on SoFi with a neutral rating and price target of $16.50, suggesting virtually no upside from current levels. Chiodo expects SoFi’s more profitable lending operations to continue to subsidize the expansion of its Money and Invest products. Currently, both products are money losers, but have been experiencing high user growth.
"As a 'one-stop-shop' U.S. neobank, SoFi has repositioned itself to enable deposits, card accounts, and investing after being concentrated for much of the first decade of its existence. We initiate coverage with a Neutral rating, awaiting further signs of progress toward achieving the 2025 plan."
Wall Street Memes’ view
SoFi has been delivering good results, while it appears to be on track towards profitability. SoFi has topped revenue expectations in its first earnings season as a public company; expanded its services; and still has plenty of opportunities to grow.
As a potential target of meme mania due to its popularity on discussion boards, the stock could see shareholder value creation in the short term from momentum alone. But better yet, the company has decent-enough fundamentals to support bullishness also in the medium and long terms.
Get more expert analysis on "stonks"
It’s never too early (or late) to start growing your investment portfolio. Join the Real Money community for just $7.50/month and unlock expert advice from our team of 30+ investing pros.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)