Surging interest rates continue to put pressure on fintech stocks, but shares of SoFi are due for a rebound, Piper Sandler says. Analyst Kevin Barker upgraded SoFi to overweight from neutral, saying in a note to clients Monday that the fintech stock is trading at a hefty discount. “We acknowledge there will be some headwinds due to rising rates, but the market is over-discounting SOFI with the company poised to show a significant ramp in EBITDA in 2H22 and into 2023,” Barker said. “The combination of rapid growth in deposits, the expiration of the student loan moratorium, and revenue growth in the financial services segment should lead to significant earnings momentum throughout 2023 and 2024.” The upgrade comes after the company reported first-quarter earnings that beat analyst estimates but shared weaker-than-expected revenue guidance for the current quarter. Last month, President Joe Biden extended a payment pause on federal student loans until August 31. Many suspect that pause will extend through the end of the year, which could benefit SoFi in 2023, Barker said. “This should lead to a rush of people looking to refinance their debt in early 2023 along with originations jumping back to $2.0B+,” he wrote. “We estimate an expiration of the moratorium could result in an additional $20-30M of EBITDA per quarter.” Along with the upgrade, Piper Sandler lowered its price target on SoFi to $10, which implies a more than 48% return from Friday’s close price. Shares of SoFi have plummeted 57.3% this year but are trading up 10.3% since the start of the month. The firm also lowered earnings per share guidance through 2024. — CNBC’s Michael Bloom contributed reporting
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