By
Temitope Olatunji
April 26th, 2024
Taking a peek into the social finance (SoFi) product suite will give a perfect reason why the Jefferies analyst is bullish on the stock.
American online personal finance company, SoFi Technologies Inc (NASDAQ: SOFI) saw a positive trading day on Wednesday as the shares jumped by over 11% on Jefferies coverage of the stock with a price target of $25. At the projected price target, the stock will grow by more than 64% above the $16.84 the stock closed at on Tuesday.
SoFi has been on a tear all year long with a very impressive performance in the second quarter of the year. The company tripled its financial services product in the quarter and doubled its revenue when compared to the same period last year. The Jefferies analyst John Hecht said that SoFi has multiple avenues for growth, citing its “synergistic business model” and recently acquired tech platform Galileo.
“An industry leader in the rapidly expanding neobank space, SoFi boasts an exhaustive consumer finance product suite, a robust digital platform, and omnichannel execution,” analyst John Hecht wrote.
SoFi has rebranded cross-selling opportunities in the financial sector, and its current growth upshoots as it is bound to attract more customers willing to try out the company’s products. With the new influx of first-time customers, Hecht said the firm currently expects more than 46% average revenue growth through 2025.
“We believe this highly synergistic business model, which encourages significant cross-sell activity, will propel user growth, margins, and profitability over the long term,” said Hecht
Amongst the major catalyst Hecht pointed out would also push the firm’s growth drives including the banking charter that is underway, a move potentially able to significantly increase its national financial services reach. The Jefferies analyst believes the fact that SoFi has multiple streams of income will in more ways than one contributes to the burgeoning valuation of the firm.
“Given SoFi’s numerous business lines and streams of income, as well as the fact that we do not expect positive earnings to start until FY24, we believe a sum-of-the-parts valuation framework is warranted,” Hecht said.
SoFi Price Target Fueled by Various Product Segments
Taking a peek into the social finance (SoFi) product suite will give a perfect reason why the Jefferies analyst is bullish on the stock. The $25 price target is not particularly driven by a recent overhaul but by the variety of product offerings from the firm.
While SoFi offers a variety of loan products ranging from auto loan finance to student loans, to personal loans and mortgage, it also offers fractionalized stock investing as well as an opportunity for its customers to buy into Initial Public Offerings (IPOs) for firms looking to make their stock exchange debuts.
Above all, SoFi offers crypto services, and through its platform, Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Polkadot (DOT), and a host of other digital currencies can be bought and sold. The firm has lowered the barrier to entry for anyone to get started with the crypto service which can be subscribed to with just $10.
These product offerings amongst others solidify the growth prospect of SoFi which might in the long term make the projected $25 price target a less ambitious one.