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On Tuesday, Keefe, Bruyette & Woods analysts reaffirmed their Outperform rating for Coastal Financial Corp (NASDAQ: CCB), maintaining the price target at $110. This decision follows the integration of Walmart (NYSE:WMT)’s credit card functionality into OnePay’s app, which is seen as a beneficial development for Coastal Financial.
The analysts highlighted the potential cross-sale opportunities arising from millions of customers opening OnePay credit card accounts. Coastal Financial sponsors many of OnePay’s products, and the analysts noted that every 2.3 million Walmart shoppers opening a OnePay deposit account could potentially generate approximately $16 million in revenue for Coastal Financial. According to InvestingPro data, the company has already demonstrated strong revenue growth of 25.44% in the last twelve months.
While Coastal Financial was previously considered a contender for the Walmart credit card issuing deal, the announcement of Synchrony Financial (NYSE:SYF) as the issuer was not unexpected. Larger, more established issuers were anticipated to be the front-runners for this deal.
Despite not winning the issuing deal, the involvement of OnePay and its branding in the Walmart credit card initiative is viewed positively for Coastal Financial. The analysts believe this reflects Walmart’s strategic move to incorporate a neobank under its umbrella through its joint venture, Hazel, to internalize some financial services.
Overall, the analysts maintain a positive outlook on Coastal Financial’s prospects, supported by the potential growth opportunities linked to the OnePay platform. InvestingPro analysis shows the company maintains a "GREAT" financial health score, with analyst price targets ranging from $100 to $120. Subscribers can access 8 additional ProTips and comprehensive financial metrics to make more informed investment decisions.
In other recent news, Coastal Financial Corporation has made several noteworthy announcements. The company has appointed Baker Tilly as its new independent auditor following a merger involving its previous auditor, Moss Adams LLP. This change comes after Moss Adams resigned due to the merger, although there were no disagreements on accounting principles or audit procedures during their tenure. Coastal Financial also reported updates to its bylaws, removing the age limit for directors and introducing more detailed requirements for shareholder proposals and director nominations. These changes aim to enhance governance flexibility and streamline corporate processes.
During the recent annual shareholder meeting, Coastal Financial elected four directors and approved an advisory vote on executive compensation, reflecting strong shareholder support. The meeting also ratified the appointment of Moss Adams LLP as the auditor for the fiscal year ending December 31, 2025. Analysts from Keefe, Bruyette & Woods maintained an Outperform rating on Coastal Financial, highlighting the company’s partnerships with Robinhood (NASDAQ:HOOD), Dave, and T-Mobile as strategic growth opportunities. Despite a recent financial restatement, the analysts expressed confidence in the bank’s earnings stability and growth potential, projecting more than 155% EPS growth from 2024 to 2026.
These developments underscore Coastal Financial’s strategic positioning in the Banking as a Service sector, with the firm poised to launch multiple significant programs in 2025. The analysts’ maintained rating and price target of $114 reflect confidence in the company’s direction and potential for growth. Coastal Financial’s recent initiatives and partnerships are seen as pivotal in capitalizing on emerging opportunities within the financial industry.
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