Fintech stocks ended 2023 on a high note with a strong surge in December. Yet, driven by a mix of factors including changing macroeconomic expectations and continued normalizing non-prime credit performance, overall, the group has not gotten off to a good start this year, trailing the broader market’s performance.
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SoFi Technologies (NASDAQ:SOFI) has been no exception, experiencing a year-to-date decline of 23% in its stock price. With the neo bank preparing to release 4Q23 results next Monday (January 29), can the upcoming report provide a shift in sentiment?
One potential catalyst for optimism is the prospect of 4Q23 being the first quarter in which SoFi achieves GAAP net income profitability. That is the expectation of Jefferies analyst John Hecht, who anticipates EPS of $0.01, just edging ahead of Wall Street’s $0.00 forecast.
At the other end of the spectrum, Hecht’s top-line forecast is slightly below the Street’s, calling for adj. net revenue of $568 million vs. $574 million. That will amount to year-over-year growth of 28%, primarily boosted by loan receivables growth of ~76% y/y “coupled with higher yields.”
On originations, Hecht anticipates an increase in activity driven by the student loan sector, although this will be balanced by normal reduced demand for personal and home loans during this season. Despite an expected drop in quarter-over-quarter total originations due to seasonal factors, Hecht expects total originations to show year-over-year growth of 65%.
For the full-year, SOFI has guided for adj. net revenue of $2.04-$2.065 billion (Hecht is at $2.048 billion) and adj. EBITDA of $386 – $396 million, lower at the midpoint than Hecht’s $396 million forecast.
Taking an overall view of the company’s prospects, Hecht remains bullish on SoFi. He notes, “We continue to appreciate SOFI’s strong credit metrics relative to peers, as well as its momentum with new customer and product growth, despite fluctuations in Fintech peer multiples given the elevated rate environment,” said the 5-star analyst. “We will continue to follow the pace of new account growth, momentum within the financial services segment, as well as contributions from Galileo and Technisys.”
As such, Hecht rates SoFi shares a Buy and keeps his Street-high $15 price target intact. The figure suggests the stock will post robust growth of 94% in the year ahead. (To watch Hecht’s track record, click here)
Not all on the Street, however, are quite as confident; the analyst consensus rates the stock a Hold, based on a mix of 6 Holds, 4 Buys and 3 Sells. The average price target currently stands at $9.29, factoring in one-year returns of 20.5%. (See SOFI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.