Rosenblatt analyst Sean Horgan reiterates Buy rating on SoFi Technologies following the company's regulatory approval to become a national bank.
Shares of SOFI jump 16% in pre-market trading, though it's still off nearly 60% from its Feb. 2021 peak.
The analyst's EBITDA estimate for 2022 moves to $235M vs. the ~$175M consensus, with the approval news "as the primary driver of SOFI's expected outperformance over the next 12 months, Horgan writes in a note to clients.
Lifts price target to $30 per share from $28, implying 149% upside from Tuesday's close.
Still, the company has a Profitability Grade of "F," with net income margin and return on common equity underperforming the sector median by a wide margin.
Moreover, the bank charter enables SoFi (SOFI) to offer higher yields to grow its retail deposit base, benefit from longer holding periods for its balance sheet assets, and retail instead of warehouse funding helps relieve some costs, Citi analyst Ashwin Shirvaikar, who also rates SOFI with a Buy, writes in a note to clients.
Meanwhile, the Buy ratings disagree with the Bearish Quant Rating, with the poorest grades in Profitability and Momentum. But it aligns with the Bullish Wall Street Analyst Rating (6 Very Bullish, 2 Bullish, 3 Neutral).
Previously, (Jan. 6) SoFi shares dropped to its lowest level ahead of the bank chart approval.