Chime Gets a Bullish Rating From Morgan Stanley After Strong IPO

Chime (CHYM), the online banking startup that made its debut on the Nasdaq last month, received a bullish rating from Morgan Stanley analysts Monday, citing its potential for fast revenue growth.

The bank initiated coverage of Chime with an “overweight” rating and $39 price target. Chime shares rose about 1% Monday to close near $32, with Morgan Stanley’s target suggesting over 20% upside. The stock has climbed roughly 17% from its initial public offering price of $27.

Morgan Stanley said Chime has shown a “proven ability” to become the primary banking account for its customers, and broaden its user base. The analysts said they are “optimistic about Chime’s ability to maintain fast revenue growth and fairly 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.

Morgan Stanley is more bullish on the fintech firm’s stock than analysts at UBS, Goldman Sachs, and Deutsche Bank, which initiated coverage with neutral ratings. In a note to clients Sunday, 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. “We believe the lack of profitability is an overhang in the near term, and see valuation as somewhat full at current levels,” the analysts said. UBS and Deutsche Bank issued price targets of $35, while Goldman gave it a target of $34.