SoFi's Technisys deal 'strategically sound' with near-term risk, analyst says

Analyst notes

In a research note dated Feb. 22, Rosenblatt Securities analyst Sean Horgan said SoFi Technologies Inc.'s deal to acquire Technisys SA makes strategic sense but presents near-term risks.

Horgan said that the deal provides revenue expansion opportunities with clients of SoFi's payment processing subsidiary Galileo, as well as cost savings within SoFi's own business. The combined platform stands to benefit as banks transition from older banking cores to cloud-native multiproduct cores such as Technisys', he added.

However, Horgan lowered SoFi Technologies' price target to $22 from $25 to reflect "ongoing multiple compression and heightened execution risk."

Initiation

Janney analyst Jake Civiello initiated coverage of Bronx, N.Y.-based Ponce Financial Group Inc. at "buy," citing its "differentiated market position" and discount to peers on tangible book value.

Ponce is designated as a Community Development Financial Institution and a Minority Depository Institution by the U.S. Treasury department, and is among the largest banks operating as a CDFI, Civiello wrote in a Feb. 24 note. The bank's discount to peers on tangible book value should narrow once the bank establishes a stock dividend and share repurchase program, he argued.

"We also believe PDLB will find incremental new investors attracted to the minority-driven, ESG dynamics of the business model," the analyst said.

Janney set its fair value estimate at $12.25, and set its non-GAAP EPS estimates for 2021, 2022 and 2023 at 42 cents, 26 cents and 50 cents, respectively.