Wall Street initiates Chime coverage: What analysts are saying after June debut

Investing.com -- Wall Street is initiating coverage on Chime Financial (NASDAQ:CHYM) following the online banking services provider’s June market debut, with analysts highlighting its strong customer engagement, product innovation, and expanding addressable market, but differing on valuation and near-term profitability prospects.

JPMorgan started coverage with an Overweight rating and a $40 price target, citing Chime’s “asset-light, spend-centric” business model and the largest direct deposit base among U.S. fintechs.

“Chime cracked the code of scaling financial services as a non-bank,” the bank’s analysts wrote, highlighting that about 70% of user spend is non-discretionary and drives recurring interchange revenues.

“Chime boasts the largest direct deposit base of any U.S. fintech ever, ranking as the sixth largest debit card issuer, with >20% purchase volume and member growth in 2024,” they added.

Morgan Stanley (NYSE:MS) also launched at Overweight with a $39 target, emphasizing Chime’s ability to consistently add new users and win primary deposit relationships.

The Wall Street firm expects “continued execution against a sizable demographic opportunity,” noting that Chime has roughly 6 million primary accounts and sees potential to maintain its growth pace of 1.5 million users per year.

“We are optimistic about Chime’s ability to maintain fast revenue growth and fairly consistent margin expansion, which we believe makes it an attractive opportunity,” analysts led by James E. Faucette noted.

Piper Sandler echoed the bullish tone, starting at Overweight with a $40 target.

The broker’s analysts called Chime’s MyPay product a “bellwether of future customer growth” and said that the company is “positioned well to further penetrate a large addressable market of nearly ~200M Americans making less than $100k per year.”

Piper’s team believes Chime deserves a premium to peers thanks to “higher growth expectations, momentum in short-term consumer liquidity products, insensitivity to interest rates, and demonstrated success in winning primary banking relationships.”

UBS, meanwhile, began coverage at Neutral with a $35 price target. While positive on the company’s business model and long-term margin expansion potential, the bank sees “a more balanced risk-reward profile for Chime shares based on valuation,” alongside the lack of near-term GAAP profitability.

Goldman Sachs also initiated at Neutral, with a $34 target, citing Chime’s “highly recurring, payments-driven revenue model” and strong customer primacy.

But, similar to UBS, the firm sees valuation as “somewhat full at current levels” and notes that profitability remains a near-term overhang, though it flags potential upside if earnings trend toward its blue-sky scenario, which suggests the potential for GAAP EBITDA profitability in 2026.

Chime made its Nasdaq debut in mid-June following an IPO that valued the online banking provider at $11.6 billion. Since then, the stock has edged lower and now trades at $31.32, giving the company a market capitalization of $11.4 billion.

Wall Street coverage on Chime is mostly positive, with analysts assigning 9 Buy ratings, 4 Neutral, and 1 Sell.