Last week it was reported that SoFi Technologies (SOPHIA) CEO Anthony Noto had spent nearly $100,000 to acquire 7,150 shares of SoFi stock. As the company’s CEO, it’s probably not all that surprising to hear that Noto is a fan, but he’s not alone.
Rosenblatt analyst Sean Horgan rates SoFi shares a Buy with a price target of $30. Investors could see a gain of 111% should Horgan’s forecast come true over the next 12 months.
Horgan recently sat down with CEO Noto for a “fireside chat,” in which Noto laid out his thoughts on where SoFi stands today and where this fintech stock is headed in the future.
“There is no challenger bank better positioned to secure a bank charter.”
This subheading of Horgan’s report pretty much sums up his take on where SoFi stands today. Currently, SoFi consists of three main businesses: lending, the largest, contributed 86% of the company’s revenues in 2020, but Horgan notes that this division should shrink to less than half of the company’s operations by 2025 (43 % of revenue) as the company diversifies by expanding its other two divisions, technology (15% of revenue now, but heading towards 25%) and financial services (just 2% in 2020, but growing rapidly from the small base to 32% of revenue in 2025).
To help SoFi achieve this growth in financial services, the company’s efforts will be to secure a banking charter, which it hopes to have in hand by the end of 2021. will consider it their ‘primary bank account’. The key to making this possible, Noto says, is the company’s ability to get customers to deposit their paychecks directly with SoFi.
“SOFI’s direct deposit is only just surfacing,” Horton says, relative to where the bank hopes to eventually get to. .”
At the same time, Horton notes that SoFi’s Galileo fintech infrastructure platform (i.e., the technology division) will complement getting the hypothetical banking charter, by making it easier for SoFi to partner with other companies to “sweep accounts, FDIC insurance warehouse facilities.” , etc.” SoFi has already doubled the number of SoFi accounts to 79 million, but there is still room for even more growth.
And speaking of growth… let’s talk about growth for a moment. From $621 million in revenue in 2020, Horton estimates SoFi will grow about 58% this year to $979.7 million, and then roughly triple that amount over the next three years, until SoFi reaches a whopping $2,500 by 2024. 86 billion in annual profit.
On the other hand, it will be a bit more difficult to generate income. Horton notes that SoFi lost $5.53 per share last year. It should cut those losses by about 90% this year and lose just $0.55 a share. Next year, the company will approach break even – a loss of $0.06 per share. By 2023, however, the analyst sees SoFi finally come into its own, earning $0.27 a share and growing by that 33% the following year.
Turning to the street in general, we can see that only two analyst reviews have been registered so far, but both are Buys. The average price target is $26.50, suggesting there is room for ~86% of the $14.21 trading price in the coming year. (See SOFI stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.