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SoFi Growing Swiftly
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SoFi Growing Swiftly

Shares of the digital financial services company SoFi Technologies (SOFI) closed 13.5% higher on Monday after Betsy Graseck of Morgan Stanley initiated coverage on the stock with a Buy rating and price target of $25, implying 35.9% upside potential. 

Graseck expects SoFi to deliver “powerful revenue growth” as it gains an increased share of consumers’ financial services wallets. 

It’s interesting to note that SoFi, through its integrated financial services platform, is driving members’ growth, leading them to adopt multiple products. Its members’ and the products’ growth rate have accelerated over the past several quarters. Meanwhile, its customer acquisition cost is declining, thus cushioning margins.

SoFi’s revenues increased 74% year-over-year during the last reported quarter, while it has delivered positive adjusted EBITDA in the past four consecutive quarters. Further, its financial services segment is witnessing stellar growth across all product lines, including SoFi invest and SoFi credit card.  

Thanks to its strong growth, increased products per member, and lower customer acquisition cost, I maintain a Bullish view on SoFi stock. 

Similarly bullish is John Hecht of Jefferies. Earlier, the 5-star analyst initiated coverage on SoFi stock with a Buy rating and a price target of $25 (35.9% upside potential). 

Hecht stated that SoFi is “an industry leader in the rapidly expanding neobank space,” with “an exhaustive consumer finance product suite, a robust digital platform, and omni-channel execution.”  

He expects its “synergistic business model” to drive its user growth and product adoption, and support margin expansion. Further, Hecht noted that “SoFi has also made progress on obtaining a bank charter – all of which should support attractive long-term growth.” 

To provide a little background, SoFi is awaiting the approval of its bank charter. During the Q2 conference call, SoFi’s CEO Anthony Noto stated, “We keep going through each step in the process,” and, “We’re encouraged about the outlook. We think we have the right type of company to be a national bank.”

Overall, SoFi stock sports a rating consensus of Strong Buy, based on 5 Buys and 1 Hold. Also, SoFi scores an 8 out of 10 from TipRanks’ Smart Score rating system, indicating it has strong potential to outperform market expectations.

See Top Smart Score stocks >>

The average SoFi Technologies price target of $24.58 implies 33.7% upside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

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