Analyst Sees SoFi Technologies' Higher Expense Ratio As Double-Edged Sword: Here's Why

Stephens & Co. analyst Vincent Caintic initiated coverage on SoFi Technologies Inc SOFI at an Equal-Weight rating with a price target of $7.

The analyst is bullish on SOFI's strong growth prospects and sees the significantly higher expense ratio (mainly marketing at 36% vs. industry at 8%) as a key driver of profitability.

However, the analyst is scrutinizing if SoFi's push to profitability will slow the growth, given normalized marketing expenses and lowered membership rewards/perks offerings to customers.

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Caintic thinks SoFi can sustain its high loan growth rate through 2025.

The analyst guides 2025 EPS of $0.35, 29% above consensus, on a higher Net Interest Income of $2.17 billion (35% above street estimate).

Read More: SoFi's Potential for Above-Average Revenue and EBITDA Growth Despite Macro Risks: Analyst Highlights

Price Action: SOFI shares are trading higher by 2.49% at $9.69 on the last check Tuesday.