Pagaya Technologies (PGY): A High-Growth Fintech Company with a Strong Buy Rating
Pagaya Technologies Ltd. (PGY) is a fintech company that is leveraging cutting-edge artificial intelligence (AI) and machine learning to enhance credit decision-making and underwriting across consumer lending platforms. Its proprietary AI-driven models enable financial institutions to broaden access to credit while maintaining strong risk management and operational efficiency. As a result, PGY stock has surged 100.9% this year, outperforming its close competitors LendingTree (TREE) and Upstart Holdings (UPST).
One of the key factors driving PGY's success is its diversified and resilient business model. The company is expanding beyond its original focus on personal loans into auto lending and point-of-sale (POS) financing, reducing exposure to cyclical risk in any single loan category. It has also built a robust network of more than 135 institutional funding partners to support the sale of its asset-backed securities (ABS) and leverage forward flow agreements as a critical alternative funding source.
PGY's lean balance sheet model avoids holding loans on its balance sheet, significantly reducing its exposure to credit risk and market volatility. This is made possible through a strategic focus on issuing ABS and a robust network of institutional funding partners. As a result, most loans never reside on Pagaya's balance sheet or only do so briefly before being transferred.
The Zacks Consensus Estimate for earnings for 2025 and 2026 has moved higher to $2.45 and $3.13, respectively, indicating 195.2% and 28% growth for those years, respectively. Management projects net income (GAAP) to be in the range of $10-$45 million for 2025, with total revenues and other income expected to be between $1.175 billion and $1.3 billion.
PGY stock is currently trading at a 12-month trailing price-to-book (P/B) of 3.20X, which is below the industry's 3.37X, showing the stock is trading at a discount. It is also trading at a discount compared with Upstart's P/B of 7.74X and LendingTree's P/B of 4.61X.
Given its strong year-to-date performance, resilient business model, capital-efficient funding strategy, and bullish analyst sentiment, PGY is well-positioned for continued growth. For investors seeking exposure to a high-growth, tech-enabled lender with solid fundamentals, PGY stock remains a compelling buy. At present, PGY sports a Zacks Rank #1 (Strong Buy).
