What happened
Rapidly growing financial technology company SoFi (SOFI -4.14%) is having an excellent day on Wednesday. While the stock market is performing quite well overall, with all three major averages in the green, SoFi had gained 10% as of 11 a.m. EDT.
So what
Today's move is being fueled by an analyst rating. Specifically, an analyst at Jefferies initiated coverage on the fintech disruptor with a buy rating and a $25 price target. Even after Wednesday's pop, this implies about 50% upside for SoFi from the current price.
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To be sure, it's important for investors to take analyst ratings and price targets with a big grain of salt. SoFi is rising today simply because an analyst offered an opinion on the stock -- not because anything has changed with the underlying business. Having said that, this isn't the first analyst to come out with an ambitious target for SoFi. Just last week, Mizuho also gave SoFi a buy rating and gave an even more aggressive $28 price target for the stock.
Now what
While it's typically not a good idea to buy or sell a stock just because of an analyst's opinion, it isn't tough to see why several prominent analysts might be bullish on the fintech. Not only did SoFi grow its revenue by more than 100% year over year in the second quarter, but its growth is also steadily accelerating. Financial services products, which are perhaps the most exciting part of SoFi, have more than tripled year over year. If SoFi can continue to cross-sell products and services to its fast-growing membership base, it could make these price targets look not too ambitious at all.
