Is SoFi Technology ($SOFI) Undervalued?

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The market may be over-discounting SoFi Technology’s growth potential, according to Piper Sandler analyst Kevin Barker, who set $10 price target for the financial services company.

SoFi Technology (NASDAQ: $SOFI) is currently trading at around $5.50-5.90 which has risen approximately 11.56% over the past month. During the period the stock fell as low as $5.66 and rose as high as $8.04.

Even though $SOFI has performed poorer than the 80% of the stocks in the market over the last month, it still has an average analyst rating of strong buy. SoFi has a long-term technical rank of 9 and ranks better than the 72% of stocks in the credit service industry.

The stock has gone through a roller coaster over the last year as the 52-week high is 24.75 and the 52-week low is 4.82.

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Over the last 12 months, the company has reported earnings of $-0.36, with TTM EPS of -0.64 and TTM PE of -9.25.

SoFi also generated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of nearly $9 million and record revenue of more than $330 million, which easily beat estimates. The company added more than 400,000 members in a quarter which adds up to now more than 3.9 million members.

To acquire and retain customers, SoFi is also creating a financial ecosystem by expanding into online brokerage, SoFi Invest, and its checking and savings accounts. In an approach to building BaaS (banking-as-a-service) business, SoFi made its latest acquisition in late February when it acquired Technisys, a cloud-based company focused on core banking services.

Even though analysts are overall bullish about SoFi, the suitable entry point is still ambiguous as the price movement mostly has been unpredictable this year. It is hard to expect SoFi to be profitable by this year, but the stock may still go down considering the current price valued at 50x valuation based on the projected 2022 EBITDA multiple.

 

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