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On Monday, Finance of America (NYSE:FOA) saw its price target increased by Raymond (NSE:RYMD) James from $27.00 to $30.00. The firm has sustained its Outperform rating on the company’s stock. The revision follows a detailed assessment of Finance of America’s fourth-quarter earnings and the annual report disclosed in the Form 10-K. The company, currently valued at $525 million in market capitalization, has demonstrated remarkable performance with a 207% return over the past year. According to InvestingPro analysis, the stock appears undervalued at its current trading level.
Despite the company’s fourth-quarter results not meeting Raymond James’ initial estimates, the firm remains optimistic. This sentiment is due, in part, to the positive outlook provided by Finance of America’s management regarding the first-quarter volumes and results. The company has also confirmed its 2025 adjusted net income (ANI) guidance, which has been a contributing factor to the analyst’s confidence. InvestingPro data reveals strong fundamentals, with revenue growth of 44.36% and a modest P/E ratio of 13.7, suggesting potential upside. Investors can access 10+ additional exclusive insights and detailed financial metrics through InvestingPro’s comprehensive research report.
Raymond James anticipates that Finance of America will experience growth in its ANI, driven by an increase in origination volumes coupled with stable gain on sale margins. Based on these expectations, the firm has decided to raise its 2025 estimates for the company. The company’s next earnings report is scheduled for May 7, 2025, which will provide crucial insights into these growth projections.
The statement from Raymond James underlined the reasons behind their continued support for Finance of America’s stock, "We are increasing our estimates and maintaining our Outperform rating on Finance of America (FOA) after reviewing the 4Q results and Form 10-K. While 4Q results were below our estimates, we were encouraged by management’s positive commentary around 1Q volumes and results. Additionally, FOA reaffirmed their 2025 adjusted net income (ANI) guidance. We expect increasing origination volumes and stable gain on sale margins to drive ANI growth, and we are increasing our 2025 estimates. We are also increasing our price target to $30 per share."
The adjustment in the price target to $30 reflects Raymond James’ analysis and their expectations for Finance of America’s financial performance in the coming years. The firm’s maintained Outperform rating indicates a belief that the company’s stock is likely to perform better than the overall market in the near future.
In other recent news, Finance of America Companies Inc. reported its financial results for the fourth quarter of 2024, showing a net loss of $143 million, or $5.95 per share. Despite this, the company achieved significant year-over-year improvements, with full-year GAAP net income rising by $200 million and adjusted EPS increasing by 116%. Finance of America expanded its product offerings and improved its cost structure, leading to a 178% rise in adjusted EBITDA. Additionally, the company appointed Andrew Essex and former U.S. Senator Cory Gardner to its Board of Directors, aiming to enhance expertise in marketing and public policy. UBS analyst Doug Harter adjusted the price target for Finance of America shares to $25 from $29, maintaining a Neutral rating. The analyst’s revision reflects a valuation pegged to 7.1 times the firm’s projected adjusted earnings per share for 2026. These developments indicate Finance of America’s strategic efforts to navigate market challenges and capitalize on growth opportunities.
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