Jefferies initiates coverage on Chime Financial stock with Hold rating

Investing.com - Jefferies has initiated coverage on Chime Financial (NASDAQ:CHYM) with a Hold rating and a price target of $17.00, closely aligning with the stock’s current price of $17.17 and InvestingPro’s Fair Value assessment.

The financial services firm identifies Chime as a leading U.S. neobank with approximately 9 million active members, with the majority using Chime as their primary bank account. The company currently holds a market capitalization of $6.38 billion.

Jefferies expressed being impressed with Chime’s track record of execution, specifically noting the company’s early focus on direct deposit and pace of product innovation. Despite these strengths, InvestingPro data shows Chime is not profitable over the last twelve months, with a diluted EPS of -$11.58.

Despite seeing ample room for member growth, Jefferies indicated that a near-term re-rating of the stock faces challenges due to slowing second-half growth and a broadened customer acquisition strategy.

The firm also cited a lack of concrete valuation support until GAAP margins inflect as another factor in its Hold rating decision.

In other recent news, Wolfe Research has reiterated its Outperform rating on Nu Holdings, maintaining a price target of $17.00. The firm emphasized Nu Holdings’ operational efficiency, noting that the company’s cost-to-serve is under $1 per customer. This efficiency allows Nu Holdings to offer products similar to traditional banks, such as credit cards, personal loans, and insurance. Meanwhile, William Blair has also reiterated an Outperform rating on Chime Financial, highlighting the company’s strong position to capture market share in consumer banking. William Blair believes Chime is well-positioned to serve less affluent customers and younger consumers demanding better digital experiences. Additionally, Chime has announced a strategic partnership with Workday to integrate its financial wellness solutions with Workday’s existing HR systems. This collaboration will provide Workday customers with Chime’s financial tools, including money management and credit-building services. These developments reflect recent strategic moves and analyst perspectives on both companies.

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