BTIG analysts initiated coverage of SoFi Technologies (NASDAQ:SOFI) with a Buy rating and $14 price target and Affirm Holdings Inc (NASDAQ:AFRM) with a Sell rating and $10 price target in a note to clients Wednesday.
AFRM shares are down more than 6% so far on Wednesday, while SoFi is up 1.5%.
They revealed in a note that SoFi is the firm's top pick in the consumer fintech space.
"SoFi's platform boasts a robust product suite and digital interface, and the intuitive UI/UX, member-first approach and cross-selling opportunities have driven significant user growth and uptake of new products," wrote the analysts.
"While SoFi's shares may be inexpensive now, it's difficult to see valuation remaining this low with GAAP profitability by the end of FY23, and potential further upside coming from the end to the student loan payment moratorium," they added.
On Affirm, the analysts said that with discretionary spend tightening quickly, the company's business model is under pressure.
"Rising rates are impacting funding costs and the gain on sale premium, while both variable and fixed costs are outstripping revenue growth. In an environment where scale and profitability are top of mind, we believe it's difficult to justify Affirm's premium valuation to peers," the analysts explained.