Shares of SoFi Technologies Inc
The company focuses on prime borrowers, which translates to lower credit risk in its lending business, while providing "higher-value cross-selling opportunities" for other products, according to Needham.
The SoFi Technologies Analyst: Kyle Peterson initiated coverage of SoFi Technologies with a Buy rating and price target of $10.
The SoFi Technologies Thesis: The company's consumer lending business, which generates around 80% of total revenues, is "well-positioned to succeed," Peterson said in the initiation note.
SoFi Technologies also has a full banking license, following the acquisition of Golden Pacific in 2022, which could "provide efficient and sticky funding that reduces revenue/EPS volatility," the analyst wrote.
"We view SOFI as a long-term winner in the digital lending/neobank space," mainly due to its focus on prime consumers and now a full banking license, "which we believe provides the company superior unit economics compared to other consumer finance platforms that focus on lower income borrowers and/or lack a banking license," he added.
"Technology and financial services platforms provide additional opportunities for upside," Peterson further wrote.
SOFI Price Action: Shares of SoFi Technologies had risen by 3.82% to $7.48 at the time of publication on Wednesday.
