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SoFi Technologies (NASDAQ:SOFI) has faced turbulent market conditions this year. However, amid this uncertainty, SOFI stock is buoyed by an optimistic evaluation from Needham analyst Kyle Peterson. With SoFi broadening its portfolio of products and services, the company seems set to rise above the challenges ahead.
Peterson recently started coverage of SOFI stock with a bullish “buy” rating and set a price target of $10 per share. In a note to investors, Peterson highlighted, “We view SoFi as a long-term frontrunner in the digital lending/neobank sector.” He emphasized SoFi’s focus on prime and super-prime consumers and its possession of a full banking license, affirming its strategic advantage over other consumer finance platforms.
The core of Peterson’s optimism lies in SoFi’s lending division, which encompasses personal loans, mortgages, and student loan refinancing. Furthermore, SoFi’s banking charter enables it to secure “efficient and sticky funding,” as reported by MarketWatch.
Expanding Horizons Drives Growth for SOFI
While SoFi’s lending operations draw significant attention, Peterson noted the significance of the company’s technological offerings like the Galileo platform. Galileo’s services cater to other fintech firms, enabling SoFi to benefit from increased vertical integration, as stated by MarketWatch.
In addition to this, SoFi has ventured into the realm of artificial intelligence (AI) through activities like loan underwriting and card issuance. According to Peterson, these ventures are pivotal for SoFi’s growth prospects, boasting high growth rates, minimal capital intensity, and scalability potential into new products or regions.
The expansion of SoFi’s value chain, which positively impacts its revenue stream, is projected to be harmonious with the firm’s bottom line. Peterson underscored that it is SoFi’s core lending operations that have allowed it to achieve GAAP profitability.
Significance of the Analyst’s Optimism
Though Needham’s encouraging assessment has sparked optimism among investors, broader sentiment toward SOFI stock remains cautious across Wall Street. Doubts persist due to a lack of significant upward momentum – over the past five years, SOFI shares have declined by more than 27%.
On the date of publication, Josh Enomoto had no positions in the securities mentioned. The viewpoints expressed here are those of the author and are subject to InvestorPlace.com Publishing Guidelines.
