SoFi Impresses With Q3 Beat And Upgraded Guidance, Analysts Boost Price Forecasts On Loan Momentum

SoFi Technologies Inc SOFI stock is trading higher after Needham analyst Kyle Peterson maintained a Buy rating and raised its price target from $10 to $13.

Goldman Sachs analyst Michael Ng maintained SoFi with a Neutral and raised the price target from $7.5 to $8.5.

Barclays analyst Terry Ma maintained SoFi with an Equal-Weight and raised the price target from $8 to $9.

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Needham: SoFi posted a solid third-quarter performance, surpassing Wall Street estimates on both revenue and earnings.

The increase reflected solid growth in loan sales and platform fees, providing capital-efficient revenue that enhances overall growth. Peterson reinforced his bullish stance on SoFi, particularly as interest rates normalize.

SoFi reported third-quarter 2024 GAAP revenue of $697.1 million, marking a 29.8% year-over-year increase, outpacing Needham’s estimate of $629.6 million and the Street consensus.

Solid loan platform fees, increased loan sales, and securitizations primarily drove the beat.

Adjusted revenue reached $689.4 million, surpassing Needham’s projection of $627.6 million and the consensus estimate of $631.6 million. With net interest margin (NIM) slightly underperforming at 5.57%, down 42 basis points year-over-year, operating leverage pushed SoFi’s EBITDA to $186.2 million, topping both Needham’s $162.1 million estimate and the $165.1 million consensus.

With the momentum across SoFi’s operations, the company raised its fiscal year 2024 guidance. SoFi now anticipates net revenue of $2.535 billion – $2.550 billion, up from the prior range of $2.425 billion – $2.465 billion, translating to a growth outlook of 22% – 23% year-over-year. Despite reducing growth expectations for its tech platform, SoFi raised its EBITDA projection to $640 million – $645 million, up from the previous range of $605 million – $615 million.

The company lifted the expected GAAP EPS to $0.11 – $0.12, with projected tangible book value (TBV) growth of $1.00 billion – $1.05 billion, compared to the prior forecast of $800 million – $1 billion.

Peterson remains optimistic about SoFi’s trajectory. He highlighted the potential for upward revisions if Federal Reserve rate cuts stimulate further loan platform fees and sales growth. SoFi’s shares dipped around after the results, which the analyst attributes to heightened expectations following robust recent performance. Peterson projected fourth-quarter net revenue of $674.580 million and EPS of $0.04.

Goldman Sachs: SoFi’s impressive results were primarily fueled by increased personal loan originations, which reached $4.9 billion, significantly above the expected $3.9 billion. Additionally, SoFi’s loan platform fees increased fivefold year over year, bolstering the Financial Services segment. The company’s partnership with third-party capital markets firms, such as Fortress, supports this growth in a capital-light model.

SoFi’s Financial Services revenue and contribution profit exceeded expectations, with the Loan Platform generating $61 million in net revenue from origination and servicing fees—this growth and expanding deposits allowed SoFi to rely less on warehouse credit lines, reducing funding costs. As the company innovates its offerings, it aims to increase revenue per product, which rose by 52% year-over-year in the quarter, enhancing user engagement.

For fiscal year 2024, SoFi upgraded its revenue forecast and outlined new product innovations to drive further growth. The company anticipates growth in its tech platform, although at a reduced rate, with revenue in that segment projected to grow in the low-to-high teens percentage range. Ng projected fourth-quarter net revenue of $743 million and EPS of $0.05.

Price Action: SOFI stock is up 9.12% at $11.43 at last check Wednesday.

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