Piper Sandler analyst Kevin Barker upgraded SoFi Technologies (NASDAQ:SOFI) to Overweight from Neutral with a price target of $10.00 per share (down from $12.00).
The analyst notes a sharp selloff in SOFI stock in the past 6 months that came as a result of an extension of the student loan moratorium, rising rates, and a sharp selloff in growth stocks.
“We acknowledge there will be some headwinds due to rising rates, but the market is over-discounting SOFI with the company poised to show a significant ramp in EBITDA in 2H22 and into 2023. The combination of rapid growth in deposits, the expiration of the student loan moratorium, and revenue growth in the financial services segment should lead to significant earnings momentum throughout 2023 and 2024,” Barker said in a client note.
Barker expects that an eventual expiration of the moratorium could result in an additional $20 million to $30 million of EBITDA per quarter for SOFI.
The analyst also argues that the market is likely to start appreciating SoFi more in the second half of this year, which should also lead to a better multiple on the stock.
SOFI stock price is up almost 7.5% in pre-market Monday.
By Senad Karaahmetovic