After more than eight student loan moratorium extensions, student loan payments are now confirmed to resume in the fall — much to the benefit of SoFi (NASDAQ:SOFI) stock fans. Indeed, the U.S. Department of Education recently iterated that payments will be due beginning in October.
While this isn’t the first time the Department of Education has issued warnings of student loan payments to come, Congress recently passed a law preventing further extensions of the loan moratorium.
If you recall, the bi-partisan debt ceiling agreement passed earlier this month actually includes a stipulation, essentially guaranteeing the payment pause won’t be further pushed back.
Interestingly, while student debt payments will resume in October, interest on these loans will actually kickstart on Sept. 1.
While this is undeniably a point of concern for the close to 40 million Americans with student debt (typical student loan payments amount to about $350 per month according to CNBC), it’s a major bullish catalyst for SoFi. As you may remember, prior to the pandemic and accompanying loan payment pause, SoFi earned the majority of its revenue from its student loan service.
Analysts Upgrade SOFI Stock Ahead of Return to Student Loan Payments
With student loan payments back on the horizon, analysts have started to swan over SOFI stock. This includes BTIG analyst Lance Jessurun, who recently initiated coverage with a “buy” rating. According to Jessurun, SoFi will prove to be a long-run champion in the new tech-forward banking ecosystem.
The analyst noted to clients on Tuesday:
“We are at a pivotal point for Fintech stocks, and believe the run-up in valuations over the last two months will see some divergence as the macro environment evolves […] In this environment, we prefer names tied to recurring IT spend, and are cautious on names tied to consumer discretionary spend.”
Not alone, investors have clearly taken note of SoFi’s impending revenue potential. SOFI stock is up more than 90% year-to-date (YTD). Shares have jumped from $4.50 in January to their current roughly $8.60 price point.
According to Jessurun, the company has plenty of room to run up even further. The analyst set a $14 price target on SOFI, representing more than 60% upside from yesterday’s close.
“Given numerous tailwinds, GAAP profitability, and policy changes, we see significant upside to shares, and note that SOFI is our favorite long-term choice in the consumer-facing fintech space,” Jessurun wrote, per CNBC.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
