Benchmark maintains Buy rating on Pagaya Tech stock

Benchmark reaffirmed its Buy rating on Pagaya Tech with a $25 price target following discussions with executives, citing the company's sustained profitable growth and strong Q1 2025 performance, including a surprise EPS of $0.69 and revenue of $290 million. Pagaya's stock has surged over 93% since April 21, driven by operational progress and the launch of a $1 billion asset-backed securitization program (POSH). Citizens JMP also reaffirmed a Market Outperform rating with a $20 price target, noting Pagaya's expansion in installment lending services through collaborations with Klarna and Walmart.

Analysis

Pagaya Tech (NASDAQ: PGY) has demonstrated significant operational and financial strength, as evidenced by Benchmark analysts reaffirming their Buy rating with a $25.00 price target following discussions with company executives. This confidence is supported by Pagaya's impressive first-quarter 2025 results, where earnings per share reached $0.69, starkly outperforming the anticipated loss of $0.17, and revenue grew 18% year-over-year to $290 million, surpassing forecasts of $286.3 million. Notably, the company achieved its first-ever GAAP net income of $8 million, underscoring a move towards sustained profitability, further supported by a 23.7% revenue growth over the last twelve months and a GOOD overall financial health score. This strong performance has contributed to a more than 93% surge in Pagaya's stock price since April 21. Strategic initiatives, such as the launch of a $1 billion asset-backed securitization program named POSH, with an initial $300 million deal set to close, are designed to enhance point-of-sale financing and increase lending capacity. Furthermore, the collaboration with Klarna, in partnership with Walmart, to expand installment lending services highlights Pagaya's focus on scaling its POS platform and its momentum in the ABS markets, with over $2.8 billion in rated ABS deals executed year-to-date. Analyst sentiment is broadly positive, with Citizens JMP also reaffirming a Market Outperform rating ($20 price target) based on projected 2026 GAAP EPS, and 7 analysts having recently revised earnings expectations upward, with price targets ranging from $13.75 to $36.

Key Decisions for Investors

• Given Pagaya's robust Q1 2025 financial performance, including a significant EPS beat and its first GAAP net income, coupled with strong analyst endorsements and strategic growth initiatives, investors could view the company's outlook positively.
• Investors should closely monitor the execution and impact of the $1 billion POSH asset-backed securitization program and the expansion of its point-of-sale financing through partnerships like Klarna/Walmart, as these are critical to sustaining growth momentum.
• Despite the substantial recent stock price appreciation exceeding 93%, the reaffirmed buy ratings and upward earnings revisions suggest continued potential, though careful consideration of valuation and market volatility is warranted given the sharp rally.