SoFi Technologies, Inc. (NASDAQ: SOFI) said that it has completed the acquisition of Technisys S.à.r.l., a cloud-native and digital multi-product core banking platform. Shares of the digital personal finance company declined 5.5% in the extended trading session on Thursday.
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Deal Benefits
The acquisition is expected to complement SoFi’s Galileo business. Also, the addition of Technisys’ strategic technology and business is supposed to result in a combined Galileo/Technisys technology, i.e., an end-to-end vertically integrated banking technology stack.
Further, SoFi plans to migrate its multiple third-party cores to a single owned and operated Technisys core. This move is expected to help SoFi to innovate even faster, perform more real-time decisioning and offer greater personalization.
Financial Benefits
SoFi also expects the deal to support revenue expansion, thereby accelerating its three-year revenue CAGR. The estimated incremental revenue from the acquisition, including base revenue of Technisys and revenue synergies of the vertically integrated capabilities, is expected to add a cumulative $500 to $800 million through 2025.
SoFi expects the deal to create about $75 to $85 million in cumulative cost savings from 2023 to 2025 and nearly $60 to $70 million annually thereafter.
Stock Rating
Following the news, Morgan Stanley analyst Betsy Graseck maintained a Buy rating on SoFi with a price target of $18 (68.4% upside potential from current levels).
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 7 Buys and 4 Holds. The average SoFi price target of $18.28 implies 71% upside potential to current levels.
News Sentiment
News Sentiment for SoFi is Very Positive based on 58 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 64%, and none have Bearish Sentiment, compared to a sector average of 36%.
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