One way to evaluate the current state of the economy is by viewing which companies are succeeding. Fiscal environments characterized by high liquidity and low interest rates pave the way for more risk to be taken. Financial services firms like Upstart (UPST) and SoFi Technologies Inc. (SOFI) both posted quality Q2 earnings last week. SoFi provides student loan refinancing, but has transitioned to a broader lending platform. (See SoFi Technologies stock charts on TipRanks)
Reporting on the positive development is Sean Horgan of Rosenblatt Securities, who wrote that SOFI’s financial services segment expanded 250% quarter-over-quarter, and is headed toward becoming a significant stream of revenue. The company maintained its yearly guidance, and saw membership increase 113% year-over-year.
Horgan reiterated a Buy rating on the stock, and declared a price target of $30. This bullish target represents a possible 12-month upside of 100.13%. It is important to note that SOFI fell a precipitous 14.15% by the end of trading on Friday.
Aside from an extended moratorium on public student loan payments enforced by the CARES (Coronavirus Aid, Relief, and Economic Security) Act, the company is poised to continue releasing monetization initiatives and is expecting a bank charter approval at some point over the next couple of quarters.
Horgan believes this possible charter will be “the most significant catalyst for SOFI in 2021.”
Furthermore, he did caution that the next few trading sessions may see volatility in SoFi, as the lockup period expired for some stakeholders over the weekend. With 95% of shares now unlocked, there may be some downside as selling pressure temporarily picks up. However, this will be the end of expiring lockup periods, and thus smoother seas lay ahead afterward.
On TipRanks, SOFI has an analyst rating consensus of Moderate Buy, based on 2 Buy ratings. The average SoFi Technology price target is $26.50, suggesting a possible 12-month upside of 76.78%. SOFI closed trading Friday at a price of $14.99 per share.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
