‘The future of banking is now,’ ‘what the kids want’: SoFi gets a new Buy rating

Truist Securities analysts initiated research coverage of SoFi Technologies (NASDAQ:) with a Buy rating and an $8 per share price target.

The fintech firm is seen as “the future of U.S. banking: digital, nimble and always on.” SoFi is offering “what the kids want,” they wrote in an initiation note.

“We think SoFi represents a powerful demographic shift away from traditional banks which have been slow to innovate digital offerings, financial well-being solutions and fast loan decisioning.”

They see several positive attributes that could help SoFi, including “an appealing app UX, top-of-funnel products allowing members to “get their money right” and a growing loan offering, supported by leading underwriting/risk management tech.”

Truist analysts believe SoFi could deliver years of above-average organic revenue growth at scale, driven by loan growth. The secured bank charter is “a competitive advantage and an opportunity to reimagine how a bank should be built.”

“Now that it is a bank, SoFi has aggressively raised deposits, reaching ~$10b at 1Q23, fr just ~$1b at 1Q22, making it a beneficiary of Legacy bank deposit outflows. With this relatively low-cost funding secured, SoFi can make attractively priced loans, holding them on its balance sheet for 20%-30% bank ROE,” the analysts concluded.

SoFi shares are up almost 2% in pre-market Friday.