Two main Wall Road funding banks have issued differing views on the newly public fintech agency Determine (FIGR), as the corporate works to develop its blockchain-based lending and capital markets platform past residence fairness strains of credit score.
Keefe, Bruyette & Woods (KBW) initiated protection of Determine with an “outperform” score and a 12-month worth goal of $48.50, suggesting 17.5% upside. The financial institution praised Determine’s early dominance in tokenized credit score markets, the place it holds 73% of the non-public credit score section and 39% of all tokenized real-world belongings, in keeping with KBW’s estimates.
Based by former SoFi CEO Mike Cagney, Determine went public in September and has climbed 12% since its IPO. Its core enterprise tokenizes HELOCs and connects debtors to traders by a vertically built-in platform that features mortgage origination, distribution and a digital asset market.
KBW sees Determine’s tech stack as underutilized and able to supporting a wider vary of credit score belongings, resembling first-lien mortgages and private loans. It additionally pointed to upside from merchandise like Determine Trade and a tokenization instrument for third-party belongings.
One other dealer, Bernstein, earlier initiated protection on the inventory with a extra upbeat outlook. It charges Determine as an “outperform” with $54 worth goal, citing that the agency is doing for lending what stablecoins did for funds, tokenizing conventional belongings to make markets quicker and extra environment friendly.
Learn extra: Determine Is a Blockchain Pioneer in Credit score Markets, Says Bernstein, Initiating at Outperform
The flipside
Financial institution of America, nevertheless, took a extra cautious view.
It initiated protection with a “impartial” score and a $41 worth goal, citing dangers round execution, regulation and Determine’s dependence on its HELOC enterprise, which nonetheless generates most of its income and isn’t but absolutely blockchain-native.
BofA sees Determine Join — a brand new market that helps lenders match with capital suppliers — as the corporate’s subsequent progress driver. The financial institution expects it to account for 75% of the agency’s complete income progress between 2024 and 2027.
Whereas each banks acknowledged Determine’s management in a uncared for nook of shopper lending, they diverged on how simply the corporate can scale right into a broader fintech platform. BofA cited potential roadblocks onboarding giant establishments, competitors from different tech suppliers and altering regulatory guidelines, together with updates to the Reality in Lending Act.
The distinction in worth targets — $48.50 from KBW versus $41 from BofA — displays the uncertainty surrounding whether or not Determine’s blockchain infrastructure can transition from a distinct segment use to a extra central function in trendy finance.
Learn extra: Blockchain-Based mostly Lender Determine Costs IPO at $25 Per Share, Elevating Almost $788M