On Tuesday, SoFi Technologies, Inc. (NASDAQ:SOFI) received a positive outlook from Jefferies, with the firm raising the stock's price target from $12.00 to $13.00 while maintaining a "Buy" rating. The adjustment follows SoFi's third-quarter results for the fiscal year 2024, which surpassed consensus estimates. The company's success was attributed to increased loan origination, net interest income (NII), and non-interest revenue generated from its new Loan Platform.
The financial services company also saw its full-year 2024 guidance increase beyond the third-quarter performance. Jefferies noted that fair value (FV) marks were adjusted to mirror the current financial landscape, which includes lower benchmark rates and wider spreads. This adjustment indicated an improvement in personal loans (PL) credit quality, although there was a noted deterioration in student loans (SL).
Jefferies highlighted SoFi's strong position in the event of a rate cut environment. The firm's analysis pointed out that newer loan vintages within SoFi's portfolio have demonstrated a return on equity (ROE) exceeding 30%. This robust performance metric supports the firm's optimistic stance on the company's financial prospects.
The increased price target to $13.00 is based on higher estimates that reflect SoFi's recent performance and its strategic positioning. As the company continues to navigate the financial sector, these developments suggest a favorable view from analysts on its growth trajectory and resilience in varying economic conditions.
In other recent news, SoFi Technologies has reported a successful third quarter with earnings and revenue surpassing analyst estimates. The fintech company posted adjusted earnings per share of $0.05, outperforming the predicted $0.04, and enjoyed a 30% YoY surge in revenue to $697.1 million, significantly ahead of the forecasted $631.3 million. In light of these recent developments, SoFi has raised its full-year 2024 revenue guidance to between $2.535 and $2.55 billion, up from its previous outlook of $2.43-$2.47 billion and exceeding analyst expectations of $2.474 billion. The company now anticipates adjusted EBITDA of $640-$645 million for the year.
Mizuho reiterated an Outperform rating on SoFi, emphasizing the fintech company's strong quarterly results and growth potential. Goldman Sachs (NYSE:GS) maintained a Neutral rating on SoFi, attributing the company's stronger-than-anticipated financial results to its Lending segment, which posted a contribution profit of $239 million.
SoFi has been expanding its lending operations through its loan platform business, scaling originations while maintaining a fee-based, capital-light, and low-risk profile. The company added over 756,000 new members in Q3, boosting its total member count to nearly 9.4 million, a 35% YoY increase.
InvestingPro Insights
SoFi Technologies' recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $11.16 billion, reflecting its significant presence in the fintech space. SoFi's revenue growth of 30.3% over the last twelve months as of Q2 2024 supports Jefferies' positive outlook on the company's loan origination and revenue generation.
An InvestingPro Tip indicates that net income is expected to grow this year, which corroborates Jefferies' increased guidance for full-year 2024. This expectation of profitability is further reinforced by another InvestingPro Tip suggesting that analysts predict the company will be profitable this year, despite not being profitable over the last twelve months.
The stock's strong performance is evident in its 62.88% price total return over the past year, and a remarkable 40.75% return in just the last month. These figures align with Jefferies' decision to raise the price target, reflecting growing investor confidence in SoFi's business model and future prospects.
For readers interested in a deeper analysis, InvestingPro offers 11 additional tips for SoFi Technologies, providing a comprehensive view of the company's financial health and market position.
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