Analysts at Bank of America have turned bullish on shares of SoFi (SOFI).
The bank on Wednesday upgraded shares of the company to Buy from Neutral, boosting their price target to $9 per share from $8 per share on the heels of the student loan payment moratorium ending and its NFL partnership.
“We see potential for a meaningful catalyst path over the next few quarters as SoFi benefits from the student loan payment moratorium ending and its high-profile NFL-aligned marketing investments drive user growth and engagement,” analyst Mihir Bhatia wrote in a Wednesday note.
Shares of SoFi were up about 3.5% to trade near $6 on Wednesday afternoon; the stock has fallen over 65% this year.
'Light at the end of the tunnel'
Last month, President Joe Biden announced he would extend the current moratorium on student loan payments for four months, bringing the pause into next year.
Student loan payments have been on pause since March 2020, when the CARES Act was passed by Congress. Loan payments were set to resume in September 2020, but the moratorium has been extended four times.
The latest extension is expected to be the final one, however, which “removes a major overhang for SOFI and could also provide incremental upside to 2022 estimates," Bhatia wrote. BofA called this "light at the end of the tunnel" for the company.
“Student loan refinance is SOFI's most profitable product and the loan forbearance has been overhang for SOFI both fundamentally (as demand was stymied for a high incremental margin product), as well as for sentiment as investors remained unsure when demand would resume,” Bhatia wrote.
As payments are set to restart next year, refinancing student loans could increase in the fourth quarter, Bank of America noted, which in turn could add $16 million in revenue and $11 million to adjusted EBITDA to current 2022 estimates.
NFL 🤝 SoFi
Additionally, as the 2022 NFL season kicks off, Bank of America expects SoFi could see a lift from its extensive partnerships with the league, which include the naming rights to the league's newest stadium in Los Angeles, which is shared by the Rams and Chargers. In 2019, the company signed a 20-year naming rights deal for the stadium.
“We expect SOFI's member growth and engagement metrics to improve in 2H22 and 1Q23 as SOFI benefits from its NFL-affiliated brand marketing,” Bhatia wrote.
SoFi also recently signed Chargers quarterback Justin Herbert to a three-year endorsement deal that includes an equity stake in the brand.
“Our analysis indicates interest in the SOFI brand inflects higher on Sundays, particularly when LA teams play home games. Member growth was also higher in 2H22 vs. 1H22 and our conversations suggest engagement also increases around football games,” Bhatia added.
New products like options trading, ETF’s, leading generation could also boost engagement, per Bhatia.
According to Bhatia, the firm offers investors Fintech and consumer finance exposure without subprime risk during current macroeconomic uncertainty.
“As such, we think there could be upside to 2022/23 metrics and shares could re-rate higher as confidence in SOFI's business model and strategy increases,” Bhatia wrote.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv