SoFi Technologies Inc (SOFI) stock is trading higher after a strong third-quarter performance, exceeding expectations and prompting analysts to raise their price targets.
The company’s robust growth, fueled by increased loan sales and platform fees, has instilled confidence in its future trajectory.
Needham analyst Kyle Peterson maintained a Buy rating and increased his price target from $10 to $13, highlighting SoFi’s capital-efficient revenue model and positive outlook as interest rates normalize.
Peterson emphasized SoFi’s ability to drive growth through its loan platform, particularly as the economic landscape evolves.
Goldman Sachs analyst Michael Ng maintained a Neutral rating but also raised his price target, moving it from $7.5 to $8.5.
Ng acknowledged SoFi’s impressive third-quarter results, driven by significant increases in personal loan originations and loan platform fees. He also highlighted the company’s partnership with third-party capital markets firms, which has contributed to its growth in a capital-light model.
Barclays analyst Terry Ma remained with an Equal-Weight rating but also raised his price target from $8 to $9.
The analyst commended SoFi’s ability to generate strong revenue from its Financial Services segment, with its Loan Platform generating $61 million in net revenue from origination and servicing fees. This, coupled with expanding deposits, has allowed SoFi to rely less on warehouse credit lines, ultimately reducing funding costs.
SoFi reported third-quarter 2024 GAAP revenue of $697.1 million, a 29.8% year-over-year increase, exceeding Needham’s estimate of $629.6 million and the Street consensus.
The company’s adjusted revenue also outperformed expectations, reaching $689.4 million. While SoFi’s net interest margin (NIM) fell slightly to 5.57%, operating leverage boosted its EBITDA to $186.2 million, surpassing estimates.
The company’s positive momentum has prompted it to raise its fiscal year 2024 guidance.
SoFi now anticipates net revenue between $2.535 billion and $2.550 billion, representing a year-over-year growth outlook of 22% to 23%. Despite reducing growth expectations for its tech platform, SoFi raised its EBITDA projection to $640 million to $645 million. The company also lifted its expected GAAP EPS to $0.11 to $0.12, with projected tangible book value (TBV) growth of $1.00 billion to $1.05 billion.
SoFi’s stock has experienced a significant jump, climbing 9.12% to $11.43 at the close of trading on Wednesday.
This upward trend suggests that investors are confident in the company’s future prospects and its ability to sustain its strong growth trajectory.
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