Chime Financial Stock (CHYM) Scores Buy Ratings from Several Top Analysts

Online banking provider Chime Financial (CHYM) made its debut on the Nasdaq last month at an initial public offering (IPO) price of $27. On Monday, CHYM stock scored Buy ratings from top analysts at Evercore, William Blair, Piper Sandler, and Morgan Stanley. Analysts at other firms also initiated their coverage of this in-focus fintech stock and expressed confidence about the neobank’s growth prospects.

CHYM stock was up about 2% as of writing. The stock has shed the initial gains made on its debut.

Wall Street Analysts Are Bullish on CHYM Stock

William Blair analyst Andrew Jeffrey initiated coverage on Chime Financial stock, saying that he views it as a “chief beneficiary of a structural banking industry shift toward consumer-friendly digital providers.” The 5-star analyst criticized traditional banks for offering credit cards with low minimum payments and high fees. He also noted that they pay little to no interest on savings and lag behind digital alternatives like Chime in terms of product breadth and innovation. Jeffrey believes that Chime has emerged as a lower-cost, higher-touch digital alternative. The analyst also highlighted CHYM’s impressive cost-to-serve advantage, which is expected to drive strong operating leverage and robust unit economics.

Additionally, Piper Sandler analyst Patrick Moley initiated coverage on CHYM stock with a Buy rating and a price target of $40. The 5-star analyst believes that the neobank is well-positioned to further expand into a large addressable market of nearly 200 million Americans with annual incomes of less than $100,000. Moley argues that while this customer cohort may be considered “low quality” by traditional banks, Chime’s innovative fee-based servicing approach has created a significant opportunity by “democratizing” credit and liquidity products. Specifically, Moley is optimistic about Chime’s recently launched MyPay offering and views it as a “bellwether” of future customer growth, which will ultimately lead to significantly higher levels of profitability for the company.

Moreover, Morgan Stanley analyst James Faucette assigned a Buy rating to Chime Financial stock, with a price target of $39. The 5-star analyst highlighted the company’s proven ability to secure a primary account status while driving consistent customer growth, generating robust adoption of new financial products, and maintaining high incremental margin. Faucette noted that consumer card spending growth, including for Chime’s under-$100K income customers, has been better than expected. He is confident about Chime’s ability to maintain rapid revenue growth and consistent margin expansion.

Top Evercore Analyst Initiates Buy Rating on CHYM Stock

On Monday, Evercore analyst Mark Mahaney initiated coverage of Chime Financial stock with a Buy rating and a price target of $38. The 5-star analyst noted that through its mobile-first platform, delivered through FDIC-insured partner banks, Chime has already attracted 8.6 million active members. The company has much room for further growth, given that it has captured less than 3% of its core segment.

Mahaney noted that Chime earns about 70% of its revenue from merchant-funded unregulated debit interchange fees, which enables it to provide no-fee spending and savings accounts, a secured credit builder card, and short-term liquidity tools, including SpotMe and MyPay. Consequently, the company generates a high 60s percent transaction margin, reflecting “economics more akin to software than to branch banking,” stated Mahaney.

The analyst believes that Chime has secured early leadership in the mass-market digital banking space and is capable of delivering over 20% revenue growth with expanding margins in the years ahead. Mahaney added that Chime is covering an $86 billion serviceable market and has a potential $300 billion longer-term opportunity as it expands its product portfolio and moves modestly up-market toward higher-income consumers.

Mahaney ranks 210^th out of more than 9,700 analysts tracked by TipRanks. He boasts a success rate of 61%, with an average return per rating of 16.3%.