On Tuesday, Keefe, Bruyette & Woods maintained its Market Perform rating on shares of SoFi Technologies (NASDAQ:SOFI) with a price target of $7.50. The firm highlighted the company's recent loan securitization activities as a positive sign, noting an uptick in the sale of personal loans in the secondary market.
The firm observed that SoFi had significantly increased its sale of personal loans, moving from $125 million between the fourth quarter of 2022 and the third quarter of 2023, to $873 million in the fourth quarter of 2023 and $1.26 billion in the first quarter of 2024. This increase in sales marks a shift in SoFi's strategy, as the company looks to manage its capital more effectively and reduce the credit risk on its balance sheet.
Despite the noted improvement in SoFi's loan sale activities, the firm pointed out that the total sales remain relatively small when compared to the company's $15.1 billion in outstanding balances, which continues to grow. Nonetheless, the increase in the secondary market transactions for personal loans is seen as a step in the right direction for SoFi.
The firm's commentary suggests that the improved activity in the sale of personal loans could be beneficial for SoFi by potentially moderating capital consumption. This could also lead to a lowering of the on-balance sheet credit risk, providing a more stable financial outlook for the company.
Keefe, Bruyette & Woods' reiteration of the Market Perform rating and the $7.50 price target reflects a steady view of SoFi's stock, acknowledging the company's recent progress in loan securitization while also considering the broader financial context of its operations.
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