One Wall Street analyst sees 42% upside for SoFi stock

December 2021CitigroupEnlightenment of the recent SPAC IPO and "social finance" firmsSoFi Technologies (NASDAQ: SOFI)The report. Analyst Ashwin Shirvaikar predicted that SoFi's "differentiated grouping of consumer and enterprise services" and "member-centric approach" would "lead to rapid membership growth and and engagement".

He's right.

According toS&P GlobalMarket Intelligence Corporation (S&P GlobalAccording to Market Intelligence, SoFi's revenue more than doubled from $977 million to $2.1 billion from 2021 to 2023, breaking a seven-quarter losing streak and turning profitable for the first time in the fourth quarter of last year.

Since then, Shirvaikar has been recommending the purchase of SoFi stock (except for a period earlier this year). On Monday, Shirvaikar reinstated its coverage of SoFi with a surprising Buy rating! - Again, a BUY rating. He is as bullish as ever on SoFi's stock, predicting that it will reach $11 within a year. This implies upside for 42%.

Is SoFi stock worth buying?

The key to Sylva Ikar's latest buy-in theory is SoFi's decision to issue a $750 million convertible bond with an interest rate of 1.25% ...... and use the funds to buy back $600 million in stock, paying for12.5% Preferred dividend. As I have argued many times, this move by SoFi is genius. I estimate that by switching from preferred to debt financing, SoFi will save $65 million in dividend payments annually.

Shirvaikar竝(negative prefix) So optimistic, then, that he predicts SoFi will save only $40 million to $60 million a year through the conversion. But even if he's right, the savings would be enough to boost SoFi's last quarter's $48 million profit by 25%, and that's just the beginning of the good news.

Looking ahead to the next few years, taking into account the impact of interest/dividend savings, most analysts believe that SoFi will post its first full year of earnings this year - at $0.08 per share - and will likely triple that amount next year ($0.24), and double it again in 2026 ($0.50 per share). At the current price of $7.75 per share, this means that the P/E ratio of SoFi stock for 2026 is only 15.4.

This seems like a very reasonable price for a fast-growing stock like SoFi.

Should you invest $1,000 in SoFi Technologies now?

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the above stocks.The Motley Fool holds a recommendation for S&P Global.The Motley Fool has a disclosure policy.

A Wall Street Analyst Says SoFi Stock Has 42% Upside was originally published by The Motley Fool.