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SoFi stock was boosted by BTIG’s bullish call.
Gabby Jones/Bloomberg
Sofi Technologies
the shares were higher on Wednesday after another Wall Street firm rated the stock as a buy. BTIG called the company a “top pick” among fintech companies.
Analysts led by Lance Jessurun began covering SoFi (ticker: SOFI) on Tuesday with a buy rating and a price target of $14 on the stock. This price target is above the $7.92 average among analysts polled by FactSet.
The call raised the shares, with the SoFi stock gaining 2.8% to $9.81 in Wednesday trading. This adds to an already impressive rally that has seen stocks soar more than 100% this year.
Despite this rally, analysts at BTIG said SoFi is cheap relative to its peers based on its price-to-tangible book value, or P/TBV, ratio of 2.70. The average P/TBV of the peer group used by BTIG is 3.47 and includes names such as
Reached
(UPST),
Robin Hood
(HOOD), and
To assert
(AFRM). BTIG’s price target assumes SoFi is trading at a P/TBV of around 4, the analysts wrote.
BTIG analysts noted strong growth in SoFi’s membership, financial services products and profitability target, which they expect the company to achieve in the fourth quarter of 2023. They also noted an increase in SoFi’s unsecured personal lending business that resulted from recent regional bank failures.
Analysts also said SoFi was primarily focused on lending, but members are now adding an average of five financial services products to one lending product, up from the one-to-one ratio seen before 2021.
Additionally, analysts expect the stock price to rise slightly when student loan repayments resume. SoFi’s student loan origination volume fell 47% year-over-year in its most recent quarter.
During this quarter, SoFi posted a lower-than-expected net loss and saw membership and revenue growth. It has also provided stellar personal loan origination numbers. However, given concerns about a recession and its impact on consumer credit, possible increased losses are expected and investors appear to view the sharp rise in personal loans as a sign of future losses, the lender said. JP Morgan analyst Reggie Smith. Barrons at the time.
BTIG has joined a chorus of other companies that are bullish on SoFi. On Monday, analysts at Truist Securities led by Andrew Jeffrey maintained their buy rating on the stock and raised their price target to $11 from $8. Last month, Truist launched a hedge with a buy rating, calling SoFi a future U.S. bank.
Others on Wall Street are somewhat mixed on SoFi. Among analysts polled by FactSet, 56% rate stocks as buy, 39% as neutral and 6% as sell.
Meanwhile, BTIG analysts led by Jessurun launched Affirm’s coverage with a sell rating and a price target of $10. Shares fell 8.4% to $17.17 on Wednesday.
A challenging macroeconomic environment caused a rapid slowdown in discretionary spending, which weighs on the company’s “buy now, pay later” business model, the analysts wrote. “Our biggest concern is the rate at which spending is outpacing revenue growth,” they said.
Write to Emily Dattilo at emily.dattilo@dowjones.com