Truist Securities analysts are bullish on SoFi Technologies, with an improved outlook for the fintech company.
In a recent report, Truist maintained a Buy rating and $11 price target for SoFi (ticker: SOFI), but raised their revenue and earnings estimates for the second quarter of 2023 and 2024.
Despite some uncertainty surrounding the resumption of student loan payments and the current economic climate, the Truist team believes that SoFi will emerge as a “structural winner” in the banking industry. They anticipate a shift towards digital platforms and an increased demand for deposit accounts.
As of now, SoFi’s stock has experienced significant growth, nearly doubling in value this year.
The Future of SoFi in the Banking Realm
There are differing opinions about SoFi’s position in the banking industry. Anthony Noto, the CEO of SoFi, believes that it is only a matter of time before his company becomes one of the top 10 financial firms in the country. Market capitalization is the criterion used to rank these firms, and currently, SoFi stands at approximately $8.6 billion. In comparison, JP Morgan Chase (JPM) and Wells Fargo (WFC), two of the largest financial institutions that reported their earnings on Friday, have market caps of $435 billion and $164 billion respectively.
Truist analysts predict that SoFi will surpass expectations with its earnings and revenue for the second quarter and full year. They attribute this success to strong growth in personal loans and a slightly wider net interest margin. Furthermore, they anticipate that student loan expansion will be supported by better-than-expected deposit growth.
According to the analysts, although lending models are always exposed to macro risks, they believe that SoFi-specific growth drivers currently outweigh these concerns.
SoFi Stock Faces Mixed Sentiments from Analysts
Morgan Stanley analysts have expressed less optimism this week regarding SoFi’s trajectory. They argue that if SoFi is taking on the characteristics of a bank, its valuation should reflect that. Consequently, they have downgraded SoFi’s shares to Underweight from Equal Weight in a recent report. However, they did increase the stock’s price target to $7, up from $6.50.
SoFi will be announcing its second-quarter earnings on July 31 before the market opens. Investors and analysts eagerly anticipate these results to gauge the company’s performance.