The volatility seen over the past few months has sent shares of many newly listed and highly valued companies into a tailspin. It’s not uncommon to see stocks showing 3-month losses in the 60% range. The Fintech space has been hit particularly hard. Look no further than the performance of SoFi Technologies (SOFI), which tumbled ~45% over the past 3 months.
Surveying this landscape, Oppenheimer’s Dominick Gabriele expects the volatility to continue, although the analyst believes SoFi has a “better business combination” than other newly listed Fintechs/Specfin.
What does Gabriele especially like about SOFI, then? “We think SOFI is one of the most well-rounding developing business models that likely has longevity,” he explained. “It’s the reason we decided to launch on this stock vs. other new Fintechs up front.”
With roots in student financing, the company’s business mix includes new consumers acquired via its student refi product, and that differentiates it against “other upstart peers.”
Additionally, Gabriele believes “account acquisition strength,” should be evident to investors this year. The company’s balance of products also gives a sense of “stability to outlook and multiple levers to generate customer interest.”
And there’s another crucial element to this story. In January, the company received approval for the coveted bank charter. This is a major boost for SoFi’s long-term strategy which “adds flexibility and helps SOFI compete on loan pricing while receiving competitive funding.”
So, what does this all mean for investors? Gabriele reiterated an Outperform (i.e., Buy) rating for SOFI shares, although given “peer valuations,” the price target comes down from $28 to $18. Nevertheless, there’s still upside of 41% from current levels. (To watch Gabriele’s track record, click here)
The Street, however, has a more upbeat price target; at $19.30, the figure implies shares will gain ~51% over the one-year timeframe. Looking at the consensus breakdown, based on 7 Buys vs. 3 Holds, the analysts’ view is that this stock is a Moderate Buy. (See SoFi stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
