SoFi Technologies shares inexpensive, Affirm business model under pressure - BTIG

BTIG analyst Lance Jessurun initiated coverage of SoFi Technologies (NASDAQ: SOFI) with a Buy rating and $14 price target and Affirm Holdings (NASDAQ: AFRM) with a Sell rating and $10 price target in a note to clients Wednesday.

AFRM shares are down more than 6% so far on Wednesday, while SoFi is up 1.5%.

Jessurun revealed in his note that SoFi is the firm's top pick in the consumer fintech space.

"SoFi's platform boasts a robust product suite and digital interface, and the intuitive UI/UX, member-first approach and cross-selling opportunities have driven significant user growth and uptake of new products," wrote Jesserun.

"While SoFi's shares may be inexpensive now, it's difficult to see valuation remaining this low with GAAP profitability by the end of FY23, and potential further upside coming from the end to the student loan payment moratorium," he added.

On Affirm, the analyst said that with discretionary spend tightening quickly, the company's business model is under pressure.

"Rising rates are impacting funding costs and the gain on sale premium, while both variable and fixed costs are outstripping revenue growth. In an environment where scale and profitability are top of mind, we believe it's difficult to justify Affirm's premium valuation to peers," the analyst explained.

By Sam Boughedda

You May Also Be Interested In

• Take-Two Interactive (TTWO) PT Raised to $368 at BofA Securities
• Alaska Air (ALK) PT Raised to $62 at UBS on Updated Q2 Estimates
• American Airlines (AAL) PT Raised to $21 at UBS Ahead of Q2 Earnings