SoFi Stock Is Headed Higher, Says Goldman Sachs: Q3 Earnings First Take

Goldman Sachs’ first take on SoFi Technologies, Inc SOFI after the lender reported third-quarter earnings is bullish, and the investment bank expects the stock to trade higher.

Goldman Sachs highlighted SoFi’s revenue, origination, contribution profit and EBITDA beat. Student loan refinancing demand was better than expected, the Wall Street firm said.

The SoFi Analyst: Goldman Sachs analyst Michael Ng rates the stock Neutral with a 12-month price target of $7.

The SoFi Takeaways: The I-bank sees the SoFi platform strengthening on the back of upbeat student loan refinancing numbers along with SoFi’s deposit and member growth.

“We are encouraged by the growth in SOFI's deposit base and utilization of this lower-cost-of-funding for its loan book, which should provide better revenue visibility relative to non-interest income, which can be more volatile,” Ng said in the note.

“That said, we recognize potential concerns about loan origination demand and the price discovery for loans on balance sheet, as well as the lack of profitability in the Financial Services segment.”

Specifically:

• Originations of $5.2 billion beat Goldman Sachs estimate of $4.7 billion and a consensus estimate of $4.6 billion on strength in student and home loans.
• 7 million total members reported as of Q3 2023, up 47% year-on-year from million in Q3 2022.
• Bank deposits totaled $15.7 billion for quarter-end (vs. $12.7 billion reported at Q2 2023).

Goldman Sachs said it expects SoFi investor focus to be more on lending gain-on-sale and less on the $247-million goodwill impairment in the quarter.

SOFI Price Action: Shares of SoFi were trading 0.58% higher to $6.91 Monday afternoon.

Related Link: SoFi CEO Clears Up ‘Misperception’ About Student Loans, Says Lender Has Competitive Advantages Driving Growth

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