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- SoFi stock could soar 98% to $30 in a bull-case scenario, according to a Wednesday note from Jefferies.
- Jefferies believes SoFi's growing product offerings will enable a significant cross-selling opportunity, according to the note.
- "SoFi's synergistic business model will continue to drive significant user growth, product adoption, and margin expansion," Jefferies said.
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SoFi stock jumped as much as 8% on Wednesday after Jefferies initiated the fintech company with a Buy rating and talked up its growth opportunity, driven by an expansion in its product offerings.
Jefferies set a $25 price target and a $30 bull-case scenario price target for SoFi, representing potential upside of 65% and 98% from Tuesday's close, respectively.
"SoFi's synergistic business model will continue to drive significant user growth, product adoption, and margin expansion," Jefferies said, adding that the company's progress towards obtaining a bank charter should help support its long-term growth initiatives.
"A federal bank charter would significantly enhance cost of funding, funding capabilities, and returns/margins. SoFi has made meaningful progress towards this goal," Jefferies explained.
SoFi recently acquired a banking institution and is in the process of transitioning its charter to the SoFi platform.
"Ultimately, this would allow it to conduct normal banking operations without the legacy brick-and-mortar infrastructure, in turn creating a cheaper base to make loans to its customers," Jefferies said.
Jefferies expects SoFi to grow its revenue at an average annual rate of 46% through 2025 as cross-selling products in the investing and loan refinance space via a leading digital interface helps improve profitability over the long term.
SoFi has several upcoming catalysts that could help boost its stock price, according to Jefferies, including the ending of a student loan moratorium in February of 2022, which should result in significant member growth as users look to refinance their loans to a lower interest rate.
The Biden administration extended a moratorium of student loan payments until the end of January as a form of aid amid the ongoing COVID-19 pandemic.
But risks are abound, and Jefferies believes SoFi stock could stay at the $8 level in its bearish scenario, representing downside potential of 51% from current levels. Much of that scenario is based on the idea that "red tape associated with increased regulation prohibits SoFi from pivoting quickly and launching new products," the note said.
