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On Friday, Citizens JMP initiated coverage on SoFi Technologies (NASDAQ:SOFI), a digital financial services platform, with a Market Outperform rating and a $17.00 price target. This target suggests approximately a 38% upside from the current trading levels. The fintech company, currently valued at $13.5 billion, has seen its stock surge over 62% in the past year, though InvestingPro analysis suggests the stock may be trading above its Fair Value.
Devin Ryan of Citizens JMP highlighted SoFi’s robust growth trajectory, improving profitability, and undervaluation in relation to its future earnings potential as key drivers for the positive outlook. The company has demonstrated strong momentum with revenue growth of 27.8% over the last twelve months. SoFi Technologies, which was established in 2011, aims to empower its customers to achieve financial independence through its app. The platform offers a comprehensive suite of financial services, including borrowing, saving, spending, investing, and asset protection.
The analyst pointed out that SoFi’s integrated financial services are accessible to over 10 million members, attributing the company’s success to its modern technology stack and a ’land-and-expand’ strategy. This approach has been instrumental in driving multi-product adoption with favorable unit economics in both consumer and enterprise markets. InvestingPro data shows the company maintains a healthy gross profit margin of 82.5% and trades at an attractive PEG ratio of 0.13, suggesting efficient growth potential.
SoFi reached a milestone by achieving GAAP profitability in 2024, marking a significant turning point for the company. With its next earnings report due on April 29, investors are watching closely to see if the company can maintain its momentum. According to the analyst, the firm’s substantial earnings potential is currently undervalued by the market, making it an attractive long-term investment opportunity. For deeper insights into SoFi’s valuation and growth metrics, check out the comprehensive Pro Research Report available on InvestingPro.
The coverage initiation by Citizens JMP reflects a confidence in SoFi’s ability to continue its growth and profit trajectory, while also acknowledging the company’s current undervaluation as a compelling reason for investors to consider the stock.
In other recent news, SoFi Technologies reported its fourth-quarter 2024 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $0.05, compared to the projected $0.04. The company also reported revenue of $734.13 million, surpassing the anticipated $669.17 million. Additionally, SoFi expanded its Loan Platform Business through agreements with Fortress Investment Group and Edge Focus, securing a $3.2 billion commitment to enhance its personal loan offerings. This expansion includes a $2 billion extension with Fortress and a two-year deal to originate $1.2 billion in loans. Analyst firms have weighed in on SoFi’s performance, with William Blair maintaining an Outperform rating, citing the company’s strengths and potential in fee-based revenue streams. Conversely, BofA Securities maintained an Underperform rating, noting a reduced growth outlook for SoFi’s technology segment. BTIG kept a Neutral rating following SoFi’s entry into the co-brand card market, highlighting a partnership with a major hotel chain. These developments reflect SoFi’s strategic efforts to diversify its revenue sources and strengthen its market position.
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