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Investing.com - Morgan Stanley has reiterated an Overweight rating on Chime Financial (NASDAQ:CHYM) with a price target of $40.00 following the company’s recent earnings report. The target represents a potential 109% upside from the current price of $19.12, though InvestingPro data suggests the stock is currently fairly valued based on its proprietary Fair Value model.
Chime Financial stock rose 3% after its quarterly results, which showed solid progress on key initiatives with better-than-expected loss rates and profitability. Management raised its full-year outlook in response to the strong performance. Despite this recent uptick, InvestingPro data shows the stock has declined significantly, falling nearly 48.5% over the past six months.
The financial firm highlighted several positive developments, including the ChimeCore transition, improving MyPay loss rates, and expectations for flat headcount in 2026, which Morgan Stanley believes will lead to significant margin expansion over the next 12 months. This potential margin improvement would be welcome news for a company that posted a -$611 million EBITDA in the last twelve months.
Morgan Stanley noted that MyPay and OIT drove Platform Revenue outperformance in the third quarter, though it cautioned that while the latter product offers high margins, it may not be a durable monetization driver.
The investment bank maintains its Overweight rating based on Chime’s ability to win primary account status while driving consistent user growth and strong uptake on new products with high incremental margin, with the next catalyst expected to be fourth-quarter 2025 earnings.
In other recent news, Chime Financial Inc. reported its third-quarter earnings for 2025, revealing a substantial revenue increase of 29% compared to the previous year. The revenue for the quarter reached between $572 million and $582 million. Additionally, Chime Financial improved its adjusted EBITDA margin by 9 percentage points, bringing it to 5%. These results reflect the company’s strong performance, prompting a positive response from investors. Following the earnings announcement, Chime Financial raised its guidance for the fourth quarter and the full year. The company’s robust earnings and optimistic outlook have contributed to heightened investor interest. These developments mark a period of significant growth for Chime Financial, drawing attention from various market analysts.
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