Is SoFi Stock worth a buy right now? Here’s what you need to know


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It is SoFi TechnologiesSOFI)A value-priced FinTech, or an overvalued Bank Mizuho analyst poses this question Dan DolevThis is the main debate among investors at present.

Dolev also has a novel answer to the question: “We call SOFI an attractive ‘FinBank’ that is benefiting from the best of both worlds: 1) being a bank helps keep funding costs low, and 2) having the allure of a branded, next-gen FinTech creates a powerful funnel for low-CAC, high-LTV customers.”

Valuation wise, mega-cap banks aside, and compared to banks of differing sizes, it looks like SOFI is trading “in line with the average.” But looking at the EV/Terminal Margin EBITDA compared to a collection of FinTech peers, it appears SOFI shares are going for a “notable discount.”

Dolev believes that SoFi, whether a bank or fintech company, is well-equipped for navigating the tough economic environment.

During the last financial crisis, across the two years, super prime borrowers – those with a FICO score above 720 – captured meaningful share of the total loan volume vs. the share of non-super prime borrowers. And when the recovery took place, they kept hold of an “elevated share of the mix.”

Accordingly, given that during difficult economic times high-FICO borrowers have “historically proved stable,” SOFI should be resilient to credit cycles based on the fact it boasts a 746 average FICO score for personal loans.

It’s good news for SOFI. But, what does it mean for investors. Dolev rates the stock a Buy, although to “reflect more reasonable near-term upside from current levels,” the analyst lowers his price target from $9 to $7. Shareholders will enjoy returns of 12% per year if the target is met. (To watch Dolev’s track record, Click here)

The Street’s $9.23 average price target sits a touch above Dolev’s prior objective and makes room for 12-month gains of ~47%. The stock has a Moderate Buy consensus rating, based on 6 Buys and 5 holds. (TipRanks has a stock forecast for SOFI)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ The Best Stocks to Purchase, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: All opinions in this article are those of the analyst featured. The information is provided solely for informational purposes. Before you make any investment, it’s important to do your analysis.


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