SoFi Is A 'Long-Term Winner' In Digital Lending, Neobank Space: Bullish Analyst

Shares of SoFi Technologies Inc SOFI have been in focus with speculations of the Federal Reserve gearing up for interest rate cuts this year.

The company focuses on prime borrowers, which translates to lower credit risk in its lending business, while providing “higher-value cross-selling opportunities” for other products, according to Needham.

The SoFi Technologies Analyst: Kyle Peterson initiated coverage of SoFi Technologies with a Buy rating and price target of $10.

The SoFi Technologies Thesis: The company’s consumer lending business, which generates around 80% of total revenues, is “well-positioned to succeed,” Peterson said in the initiation note.

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SoFi Technologies also has a full banking license, following the acquisition of Golden Pacific in 2022, which could “provide efficient and sticky funding that reduces revenue/EPS volatility,” the analyst wrote.

“We view SOFI as a long-term winner in the digital lending/neobank space,” mainly due to its focus on prime consumers and now a full banking license, “which we believe provides the company superior unit economics compared to other consumer finance platforms that focus on lower income borrowers and/or lack a banking license,” he added.

“Technology and financial services platforms provide additional opportunities for upside,” Peterson further wrote.

SOFI Price Action: Shares of SoFi Technologies had risen by 3.82% to $7.48 at the time of publication on Wednesday.

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