The seemingly never-ending student loan saga continued yesterday with President Biden extending the moratorium by another six months through June, with up to two months of potential payments pause afterward.
Unlike following the extension in April, he believes the impact on 2023 sales and profits should be less dramatic.
This is primarily due to a lower expectation for refinancing in the current high-rate environment.
The current extension led to his revenue and adjusted EBITDA downward revisions.
Wedbush analyst David Chiaverini reiterated SoFi with an Outperform and reduced the price target from $8 to $6.
Chiaverini lowered 2023, 2024, 2025, and 2026 GAAP EPS estimates owing to lower student loan origination assumptions. There is no change to his 2022 GAAP EPS estimate.
SOFI's valuation is attractive relative to its growth prospects and well-positioned to be in a tight space, given its strong cash position and durable business model.
Chiaverini writes that a premium valuation is warranted owing to the company's high growth, one-stop-shop model, and integrated technology platform through Galileo & Technisys, which differentiates SoFi from other neobanks.
Chiaverini expects credit quality to be stronger than peers, given that its borrowers are at the higher end of the credit spectrum with an average FICO of ~750. Its bank charter provides flexibility to manage through a turbulent credit buyer market.
Price Action: SOFI shares traded lower by 0.97% at $4.60 on the last check Wednesday.
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