Morgan Stanley Boosts Chime to "Overweight" Rating with $39 Price Target, Over 20% Upside

Morgan Stanley initiated coverage of Chime with a bullish rating and a $39 price target, citing the online banking startup's potential for fast revenue growth. Chime shares have risen 17% since its IPO and are expected to climb over 20% with Morgan Stanley's target. Analysts at UBS, Goldman Sachs, and Deutsche Bank initiated coverage with neutral ratings, citing concerns about profitability and a competitive environment.

Morgan Stanley has initiated coverage of Chime (CHYM), the online banking startup, with a bullish rating and a $39 price target. The analysts cited Chime's potential for fast revenue growth as a key reason for their optimism. Chime shares have risen by approximately 17% since its initial public offering (IPO) price of $27, and Morgan Stanley's target suggests over 20% upside potential.

Chime's ability to become the primary banking account for its customers and broaden its user base was highlighted by Morgan Stanley as a significant factor in their positive outlook. The analysts are optimistic about Chime's ability to maintain fast revenue growth and consistent margin expansion, particularly with consumer card spending on the rise among people with annual incomes under $100,000—a key demographic for the company.

In contrast, analysts at UBS, Goldman Sachs, and Deutsche Bank initiated coverage with neutral ratings, citing concerns about the company's profitability and the competitive environment. Deutsche Bank raised concerns about the macro-sensitive nature of Chime's core demographic and a competitive environment for companies offering an alternative to traditional banks. Goldman Sachs noted that Chime may not be profitable until 2026 at the earliest and sees valuation as somewhat full at current levels.

Chime's IPO raised $864 million, valuing the company at approximately $11.6 billion. Since then, the stock has traded near $32, giving the company a market capitalization of $11.4 billion. Wall Street coverage on Chime is mostly positive, with analysts assigning 9 Buy ratings, 4 Neutral, and 1 Sell.

References:
[1] https://www.investopedia.com/chime-gets-a-bullish-rating-from-morgan-stanley-after-strong-ipo-11767730
[2] https://www.investing.com/news/analyst-ratings/morgan-stanley-initiates-chime-financial-stock-with-overweight-rating-93CH-4124110
[3] https://au.investing.com/news/stock-market-news/wall-street-initiates-chime-coverage-what-analysts-are-saying-after-june-debut-3917125
[4] https://seekingalpha.com/article/4798481-chime-stock-path-to-strong-upside