Analyst Donald Fandetti of Wells Fargo has maintained a Sell rating on Velocity Financial with a price target of $20.00. Despite a strong quarter, concerns about NIM sustainability, potential pressure on future earnings, and high NPLs have led to a cautious outlook. The analyst sees better value in other areas of specialty finance and believes the stock has limited upside.
Velocity Financial Inc. (VEL) reported strong second-quarter earnings for 2025, with adjusted earnings per share (EPS) of $0.73, exceeding analyst expectations of $0.53 by 37.74% [2]. The company’s revenue grew by 32.06% year-over-year, reaching $85.84 million compared to the anticipated $65 million, marking a 32.06% surprise [2]. Net income increased by 76% year-over-year, driven by a 30.8% growth in the total portfolio to $5.9 billion and an improvement in the Net Interest Margin (NIM) to 3.82% [2].
Despite the robust performance, Velocity Financial’s stock declined by 1.03% in aftermarket trading, closing near its 52-week low of $16.12. The company completed four securitizations, issuing nearly $1 billion in securities, and its stock is currently trading near its 52-week low, with analyst price targets ranging from $20 to $23, suggesting potential upside [2].
Analyst Donald Fandetti of Wells Fargo maintains a Sell rating on Velocity Financial with a price target of $20.00. Despite the strong quarter, Fandetti’s cautious outlook is driven by concerns about the sustainability of the NIM, potential pressure on future earnings, and high Non-Performing Loans (NPLs) [1]. Fandetti sees better value in other areas of specialty finance and believes the stock has limited upside.
Velocity Financial remains optimistic about future growth, expecting continued increases in loan originations and targeting a NIM of 3.5%. The company is exploring potential private credit financing sources and anticipates positive market momentum over the next one to two years [2].
References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3U00YP:0-velocity-financial-inc-reports-results-for-the-quarter-ended-june-30-earnings-summary/[2] https://www.investing.com/news/transcripts/earnings-call-transcript-velocity-financial-beats-q2-2025-expectations-stock-dips-93CH-4179582
Source: ainvest.com
