Business

US student loan extension, analysts reduce estimates, price target on SoFi technology


  • Mizuho analyst Dan Dolev maintains SoFi Technology, Inc (NASDAQ: SOFI) with Buy and lowered price target from $7 to $6 Although still bullish on the stock.

  • The seemingly endless student loan saga continued yesterday with President Biden extending the moratorium for another six months through June, with up to two months of potential payments pausing after that.

  • Unlike after the April extension, he believes the impact on 2023 revenue and profit will be less severe.

  • This is mainly due to lower refinancing expectations in the current high interest rate environment.

  • Existing extension resulted in his revenue and adjusted EBITDA under downward revisions.

  • weed Analyst David Chiaverini has reiterated SoFi with a bullish rating and lowered his price target from $8 to $6.

  • Chiaverini has lowered its GAAP EPS estimates for 2023, 2024, 2025, and 2026 due to lower student loan origination assumptions. There are no changes to his 2022 GAAP EPS estimate.

  • SOFI’s valuation is attractive relative to its growth prospects and is well positioned in a tight space, thanks to its strong cash position and sustainable business model.

  • Chiaverini writes that the high valuation is warranted by the company’s high growth rate, one-stop model and integrated technology platform through Galileo & Technisys, which distinguishes SoFi from other new banks.

  • Chiaverini expects credit quality to be better than its peers, as its borrowers are at the higher end of the credit spectrum with an average FICO of ~750. Its banking charter provides flexibility to manage through the turbulent credit buyer market.

  • Price action: SOFI stock traded 0.97% lower at $4.60 on Wednesday’s final check.

Latest ratings for SOFI

Day

Sure

Work

Are from

Arrive

March 2022

Flute machine

Start Coverage On

neutral

March 2022

Morgan Stanley

maintain

Overweight

March 2022

Credit Suisse

maintain

neutral

See more analyst ratings for SOFI

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