Emily Dattilo

SoFi Technologies and Affirm Holdings are winners as consumer needs within the financial landscape shift, according to William Blair.

Analysts led by Andrew Jeffrey initiated coverage of both SoFi and Affirm stock at Outperform in a Wednesday report. SoFi stock gained 6.1% in premarket trading, while Affirm shares rose 7%.

"Our opinion is that traditional banks, cards, and consumer finance solutions struggle to keep pace with younger consumers' desire for instant credit decisions, creative lending products, flexible payment options, and transparent disclosures," the analysts wrote.

The fintech sector is a crowded space, but the William Blair team believes Affirm and SoFi are leaders thanks to their digital user experiences, accessible consumer-finance products, and flexible-payments options. They consider Affirm the leading "buy now, pay later" provider and deem SoFi a leading digital bank on track to become a top-10 financial institution by deposits.

"Although Affirm and SoFi have yet to navigate a traditional consumer credit cycle, they operated through Covid and have proved their ability to adjust risk in different macro environments," the analysts added. Beyond that, both companies have demonstrated consistent access to liquidity through a variety of sources.

"We accordingly anticipate that multiple expansion will accompany steady organic revenue growth, stable credit performance, expanding capital cushions, and improving profitability," the William Blair team wrote.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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January 15, 2025 09:08 ET (14:08 GMT)

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