This analyst positive on SoFi Stock while the banking charter is at hand


THElast week it was reported that SoFi Technologies (SOFI) CEO Anthony Noto spent nearly $ 100,000 to acquire 7,150 SoFi shares. As the CEO of the company, it’s probably not too surprising to learn that Noto is a fan, but he’s not the only one.

analyst Rosenblatt Sean Horgan SoFi rate shares a purchase with a target price of $ 30. Investors could pocket gains of 111%, if Horgan’s forecast hits the mark in the next 12 months.

Horgan recently sat down with CEO Noto for a “fireside chat” where Noto set out his thoughts on where SoFi is now and where this fintech action is heading in the future.

“There is no challenger bank in a better position to obtain a banking charter.”

This caption of Horgan’s report roughly sums up his take on the current state of SoFi. Currently, SoFi has three main businesses: Credit, its largest, contributed 86% of the company’s revenue in 2020, but Horgan notes that this division is expected to shrink to less than half of the company’s business ( 43% of revenue) by 2025 as the business diversifies. expanding its two other divisions, Technology (15% of revenue today, but growing to 25%) and Financial Services (only 2% in 2020, but growing rapidly from its small base to 32% of turnover by 2025).

To help SoFi achieve this growth in financial services, the company will strive to secure a banking charter, which it hopes to have on hand by the end of 2021. At the same time, SoFi is still striving to gain brand awareness. of its customers so will begin to think of it as their “primary bank account”. The key to doing this, says Noto, is the company’s ability to get customers to deposit their paycheques directly with SoFi.

“SOFI direct deposit is only scratching the surface” today, relative to where the bank is ultimately hoping to get, says Horton, but “if / when SOFI receives a banking license, there will be a gradual change. in the differentiation he can add. “

At the same time, Horton observes that SoFi’s Galileo fintech infrastructure platform (i.e. the technology division) will complement obtaining the hypothetical banking charter, allowing SoFi to partner more easily with other companies to offer ‘sweep accounts, FDIC insurance warehouse facilities, etc. . “Already SoFi has helped double SoFi’s accounts to 79 million, but there is room for even more growth.

And speaking of growth … let’s talk a little about growth. From $ 621 million in revenue in 2020, Horton estimates that SoFi will grow by around 58% this year to $ 979.7 million, and then approximately triple that amount over the next three years until, by 2024, SoFi will reduce by up to $ 2.86 billion per year. returned.

The gains, on the other hand, will be a bit more difficult to obtain. Horton notes that SoFi lost $ 5.53 per share last year. He is expected to cut those losses by around 90% this year, losing just $ 0.55 per share. Next year, the company will approach breakeven – a loss of $ 0.06 per share. By 2023, however, the analyst sees SoFi finally take off, earning $ 0.27 per share, then rising 33% the following year.

If we look to the street in general, we can see that there are only two analyst reviews so far – but both are buys. The average price target is $ 26.50, which suggests a margin of approximately 86% over the trading price of $ 14.21 in the coming year. (See the analysis of SOFI shares on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

About Eleanor Blackburn

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