Wealthfront: Scalable Fintech Model, Robust Organic Growth, and Underappreciated Earnings Power Support Overweight/Buy Rating

Wealthfront Corporation (WLTH) has received a new Buy rating, initiated by J.P. Morgan analyst, Ken Worthington.

Ken Worthington has given his Buy rating due to a combination of factors that highlight Wealthfront’s attractive business model and growth outlook. He emphasizes that Wealthfront’s technology-driven investment platform, including automated tax-loss harvesting and portfolio rebalancing, delivers superior after-tax performance for clients at relatively low fees, which strengthens customer loyalty and supports continued asset accumulation. He also points out that the firm’s disciplined cost structure, with a shift from variable to fixed expenses, creates increasing operating leverage as the business scales, and this benefit is shared with clients through competitive pricing on investment products and attractive yields on cash accounts. In addition, the expansion into mortgage offerings is expected to further enhance the company’s value proposition by lowering borrowing costs for its customers and broadening the product ecosystem.

Worthington further notes that Wealthfront is already demonstrating robust organic growth, with assets in both its investment advisory and cash account businesses having roughly doubled over the past two years, driven by strong inflows from existing and new clients. While he acknowledges the mix of businesses is complex—its core advisory segment is highly valuable with strong retention but slower new-client growth, and its cash products grow faster but are more rate-sensitive—his detailed, segment-level discounted cash flow work indicates that the current share price does not fully reflect the company’s long-term earnings power. Based on his sum-of-the-parts valuation, he derives a December 2026 price target of $16 per share, implying a premium earnings multiple that he considers warranted by Wealthfront’s recurring revenue profile, scalability, and long-term margin potential. These qualitative and quantitative considerations together underpin his Overweight/Buy recommendation on WLTH.

In another report released today, Citizens JMP also initiated coverage with a Buy rating on the stock with a $20.00 price target.