On Monday, SoFi Technologies Inc. (NASDAQ:SOFI) shares surged 12% to trade above $18.00 per share after Morgan Stanley analysts initiated coverage with an overweight rating. The analysts cited the company’s exciting revenue growth story, setting their price target at $25.00 per share.
Analyst Betsy Graseck said the company has a powerful revenue growth story as it ramps up a share of the financial services wallet.
In a note to investors, the analyst wrote:
“Competition is rising among challenger FinTechs for Gen Y & Z, but SOFI has a leg up given its roots in the hardest part of consumer finance, lending, along with a robust digital offering,”
The stock is now up 48% this year and more than 73% over the last 12 months. SoFi Technologies recently announced a convertible debt offering stretching its convertible notes to $1.1 billion.
Should you bet on SOFI’s growth?
Although SoFi Technologies shares trade at a steep price-sales ratio of about 16.31, this valuation multiple could improve significantly in the coming quarters based on Morgan Stanley’s hyped revenue growth story.
Moreover, at the current price of $18.13, the stock still trades below the consensus Street price target of about $23.83. Therefore, the stock has an upside potential of about 31%, making it an exciting buy for investors willing to bet on its growth story.
Source – TradingView
Is a pullback close?
Technically, SoFi Technologies shares appear to be trading within a sideways channel formation in the intraday chart. The stock has recently bounced back to rally above the 100-day moving average.
As a result, the stock has now moved closer to the overbought conditions of the 14-day RSI. Therefore, a pullback could be on the horizon.
Investors could target short-term pullbacks at about $16.65, or lower at $14.85, while $19.48 and $20.85 are crucial resistance zones.
Is it too late to buy?
In summary, although SOFI shares are up 48% this year, the stock is still down nearly 24% from its June high, and close to 30% off its year-to-date highs.
Therefore, given its exciting revenue growth and the share price compared to the consensus Street price target, it may not be too late to buy the stock.
The post Should you bet on SoFi Technologies as Morgan Staley heaps praise on revenue growth? appeared first on Invezz.
