SoFi Stadium at the NFL game between Arizona Cardinals and Los Angeles Rams on January 3, 2021 at SoFi Stadium, Inglewood, CA. (Photo by Kevin Reece/Icon Sportswire via Getty Images
According to Jefferies' Wednesday note, SoFi stock could rise 98% to $30 under a bull-case scenario.
According to Jefferies, SoFi's expanding product lines will allow for significant cross-selling opportunities.
Jefferies stated that SoFi's synergistic model of business will continue to drive significant user growth and product adoption as well as margin expansion.
Subscribe to our daily newsletter 10 Things Before The Opening Bell.
SoFi stock rose as high as 8% Wednesday, after Jefferies gave the fintech company a Buy rating. They talked up the potential for growth and cited an increase in its product offerings as reasons.
Jefferies has set SoFi a $25 price target, and a $30 bull case scenario price target, which could lead to upsides of 65% and 98%, respectively, from Tuesday's close.
Jefferies stated that SoFi's synergistic model of business will continue to drive significant user adoption, product adoption and margin expansion. He also said that progress by the company towards obtaining a bank chart should support its long-term growth plans.
Federal bank charters would greatly increase funding costs, funding capabilities, returns/margins, and cost of financing. Jefferies stated that SoFi has made significant progress in achieving this goal.
SoFi recently purchased a bank institution and is currently transitioning its charter over to the SoFi platform.
Jefferies stated that "Ultimately, it would be able to conduct normal banking operations, without the legacy brick and mortar infrastructure, in turn creating an easier base to make loans for its customers."
Jefferies projects SoFi will grow at an average annual rate 46% from now through 2025. This is due to SoFi's cross-selling of products in the lending and investing space via a leading digital interface. This helps increase profitability over the long-term.
Jefferies says SoFi will have several catalysts that could boost its stock price. Jefferies also believes the end of the student loan moratorium in 2022 in February should lead to significant member growth, as students look to refinance to lower interest rates.
As a form aid to the ongoing COVID-19 pandemic, the Biden administration extended a moratorium on student loan payments through January.
Jefferies thinks SoFi stock could remain at $8 in its bearish scenario. This would represent a downside potential of 51% compared to current levels. The note stated that SoFi cannot pivot quickly or launch new products due to the "red tape" associated with increased regulation.
Markets Insider
