On Tuesday, BofA Securities adjusted its outlook on SoFi Technologies (NASDAQ:SOFI), reducing the price target to $9 from the previous $9.50, while keeping a Neutral rating on the stock. SoFi Technologies reported first-quarter 2024 adjusted revenue and EBITDA of $581 million and $144 million, respectively, surpassing both BofA Securities' estimates and the consensus, which stood at $564 million and $123 million, and $558 million and $122 million, respectively. The results also exceeded the high end of the company's guidance, which was set at $560 million for revenue and $120 million for EBITDA.
The firm noted that the better-than-expected results were driven by slightly improved Technology and Corporate revenue. Following the strong first quarter, SoFi Technologies updated its full-year guidance upwards, reflecting the quarter's overperformance and the capital market transactions completed year to date. However, the guidance for the second quarter came in below expectations, and there was not a complete pass-through of the EBITDA gains.
The analysis recognized robust business momentum, highlighting a 44% year-over-year increase in member growth, a 20% rise in tech accounts, and a 16% quarter-over-quarter growth in deposits. Despite these positive trends, the sentiment was that investors had anticipated a more significant increase in guidance following the capital actions in the first quarter.
In conclusion, BofA Securities described the risk/reward balance for SoFi Technologies as more even, citing the current valuation and well-calibrated expectations. The firm reiterated its Neutral stance on the stock, indicating a cautious but stable outlook.
InvestingPro Insights
In light of BofA Securities' recent assessment of SoFi Technologies, it's worth considering additional metrics from InvestingPro that may provide a broader perspective on the company's financial health and market performance. SoFi's market capitalization stands at $7.44 billion, reflecting its size and investor valuation in the market. Despite the company's robust revenue growth of 34.6% over the last twelve months as of Q1 2024, concerns about its profitability are underscored by a negative Price to Earnings (P/E) ratio of -27.64. This suggests that investors are still waiting for the company to turn profitable, aligning with the InvestingPro Tip that SoFi is not profitable over the last twelve months. However, analysts predict that the company will be profitable this year, indicating potential for a turnaround.
InvestingPro Tips also highlight that SoFi is quickly burning through cash and that its valuation implies a poor free cash flow yield. These factors are crucial for investors to watch, as they can impact the company's ability to sustain operations and invest in future growth. It's also noted that SoFi does not pay a dividend, which may influence investment decisions for those seeking income-generating stocks.
For investors looking for a more comprehensive analysis, there are additional InvestingPro Tips available for SoFi Technologies. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering more insights that could help in making informed investment decisions.
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