The fall season has brought plenty of market turbulence across many sectors. Through it all, though, some companies have managed to stay primarily in the green, consistently recovering from sudden and random downturns. One company we’ve seen that from is fintech personal finance tool Sofi Technologies (NASDAQ:SOFI), which went public in early June 2021 following a SPAC (special purpose acquisition company) merger. Since then, it’s seen a fair amount of turbulence but has never stayed down for long. That may be about to change, though. A recent report from Morgan Stanley set a high price target and called attention to two major catalysts that the company has coming up. As a result, SOFI stock is having a good morning.
What’s Happening With SOFI Stock
For Sofi, this week began with Morgan Stanley analyst Betsy Graseck initiating coverage of it with an overweight rating, indicating that she considered the stock to be a good value for its current price point. She also issued a price target of $25 for SOFI stock, a gain of roughly 54% from the stock’s closing price on the previous Friday evening at close of markets.
As can be expected in such a scenario, SOFI stock was quick to react well to this news. As of this writing, it is up 8.42% for the day. Although it’s still early, it appears to still be climbing. This comes on the heels of a good previous week, in which the stock climbed almost 9% with gains over 17% for the month. The stock isn’t where it was throughout June, when it traded at almost $23 per share, but its trajectory throughout the fall as been upward overall.
Big Things Coming
In her report, Graseck highlighted two major catalysts that lie ahead for Sofi in the coming year. One of the company’s primary business lines is that of student loan refinancing. Although that’s been largely on hold throughout this year due to government holds on payment requirements, 2022 will see that change. As the report framed it, “Why refi into a lower rate when you don’t have to pay anything at all during deferment and just accrue interest on your federal loan? In February 2022 this all changes.”
The second factor to consider, according to Graseck, is that of SoFi’s application for a bank charter. The company filed for it last year and received some approval. Although there are still some steps to go, analysts wouldn’t be touting it as a reason for growth if the deal’s finalization wasn’t expected within the coming year. In March 2021, Sofi announced its acquisition of community bank Golden Pacific in a clear move to help secure their banking status.
What It Means
While the report acknowledged that competition is rising within SoFi’s sector, it noted that SoFi has a “leg up given its roots in the hardest part of consumer finance, lending, along with a robust digital offering.” Essentially, she sees the company as a market leader among fintech companies.
SoFi is certainly a known name within its sector, particularly within the arena of student loan financing and refinancing. Graseck is right that it has plenty of potential for growth throughout the year. For many, student loan payments will resume and refinancing will become a priority.
Additionally, InvestorPlace’s Mark R. Hake notes that a recent $1.1 billion convertible offering should be considered a “bullish sign for the stock.”
As the year winds down, there are plenty of reasons to watch SOFI stock. Even if it doesn’t hit Graseck’s price target, it is likely to come close and still net significant returns for investors.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
