SoFi Technologies (SOFI) Gets Another 'Buy' Rating Following SPAC Merger

June 15, 2021 4:54 PM EDT
Get Alerts SOFI Hot Sheet
Price: $15.70 -2.18%

Rating Summary:
    2 Buy, 0 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 12 | New: 23
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SoFi Technologies (NASDAQ: SOFI) just received its second formal analyst rating after completing its SPAC merger on June 1. As with the first rating, the second rating is a Buy, giving the company a perfect 10/10 analyst rating score.

After the close Tuesday, Rosenblatt analyst Sean Horgan initiated coverage on the stock with a Buy rating and $30 price target.

Horgan said SoFi has a "powerful cost advantage over incumbents which will lead to dramatic disintermediation over the next 5-10 years, leaving substantial primary bank accounts, revenues, and market value up for grabs."

According to the firm's research, challengers like SoFi have customer acquisition costs (CAC) typically ranging from $20-$50, versus up to $1,000 for traditional banks.

The low cost is possible due to a de minimus physical footprint and viral marketing / P2P network effects as evidenced by the success of Cash App (SQ: Buy) and Venmo (PYPL: Buy), Horgan said.

"The shift is already underway, as young people ask their parents to "Venmo them" some money," Horgan commented. "This is a much more powerful customer acquisition tool as compared to checking your bank balance or receiving promotional credit card offers in the mail. This is critical to the success we expect for challenger banks."

While competition and consolidation are likely to follow for mobile-first banks, the big bank challenger banks face a “jump ball” opportunity to seize market share from the old guard, the analyst added.

He sees SOFI as well-positioned to capture a significant amount of the value hanging in the balance.

As for catalysts, the analyst sees the pending national bank charter as a "meaningful catalyst."

The average price target between the two analysts is $27.50, suggesting 32% upside from the current levels.

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