This week starts off with a bang Sofi Technologies (NASDAQ:SOFI)The fintech firm will release results for the fourth quarter and full year of 2022 before market action kicks off on Monday.
JP Morgan’s Reginald Smith expects adjusted earnings to grow more than 50% year-over-year (52% for Street) on a modest 5% year-over-year decline in loan originations. “Reasonably in order,” this puts him in fourth-quarter earnings at $421 million, while Street expects him to be $426 million.
According to the company’s guidance, Smith expects the nominal contribution margin and EBITDA to decline over time and is seeking adjustments. EBITDA is $36 million for him, below consensus’s $43 million for him.
Still, expecting “strong membership and deposit growth,” Smith said the company has a “track record” of beating Street Rev/EBITDA estimates.
Key items for investors to pay attention to include: “(1) FY23 guidance (stretching the Street significantly as interest rate hedges are difficult to compare and may negatively adjust the fair value of loan portfolios; ) and its underlying assumptions, (2) the HFS Loan Book. Qualitative commentary on growth and credit trends, (3) personal loan demand, overall loan sales, and the ABS (asset-backed securities) funding environment.
Smith said that despite consumer credit indicators still deteriorating, banks showed “better than feared” indicators in the fourth quarter of 2022, with the majority backing pre-pandemic loss rates “gradually.” , and said the market would not rise sharply and immediately.
That said, Smith also said Lending Club, a major personal loan originator, took a more “conservative” stance in its fourth-quarter earnings call, citing “a rapidly changing economic environment.” , also noted that it did not provide annual guidance.
So how does all of this translate to investors? Smith remains on the sidelines for now with a neutral rating and a $6 price target. It suggests that it remains bound. (To see Smith’s achievements, click here)
Elsewhere on the street, four other analysts join Smith on the fence, but there are seven more buys, with analyst consensus deeming the stock a moderate buy. Given his average target price of $7, an investor could get him an 18% return a year from now. (look SoFi stock price forecast)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. This content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.