After a massive run that sent shares of
SoFi Technologies
skyrocketing more than 100% over the past month, analysts have started downgrading the stock.
Analysts from Piper Sandler and BofA Securities joined the club on Friday, with both firms lowering their rating on shares of
SoFi
(ticker: SOFI) to Neutral from the equivalent of Buy. Like other Wall Street analysts, they cited concerns about the company’s valuation—the same catalyst that prompted Oppenheimer analysts’ downgrade to the equivalent of Neutral earlier this week.
Shares of the financial services company dived 11% to $8.55 in Friday trading. It’s a sharp reversal from the past month: The stock surged 101% from May 16 to June 15, according to Dow Jones Market Data.
The stock’s rally was spurred by debt-ceiling legislation ending the pause on student loan payments. Student loans have been a pressure point for SoFi: In its most recent quarter, student loans origination volumes tumbled 47% year over year.
“We believe some outperformance is warranted, particularly if we were to see a significant decline in interest rates driving better margins and more attractive lending opportunities (i.e. student loans),” Piper Sandler analyst Kevin Barker and team wrote.
Interest rates could remain elevated given the sticky nature of inflation, but the analysts still say “SoFi will be a long-term winner.”
Barker and his team also lifted their target price on the stock to $8 from $6.50, prompted by an increase in their price-to-earnings multiple for SoFi’s bank segment—which includes lending and financial services. They see potential for revenue growth given the rapid upswing in deposits.
Piper Sandler also highlighted opportunities in student loans, as student debt payments will resume later this year—a factor BTIG analysts mentioned after initiating coverage on the stock with a Buy rating earlier this week.
BofA Securities analysts led by Mihir Bhatia also stepped to the sidelines on SoFi, cutting their rating to Neutral from Buy in a Friday report. Student loan payments resuming “is a positive, but was mostly already in numbers,” they wrote. BofA raised the price target on shares to $10 from $9.50.
Currently, 50% of the analysts tracked by FactSet rate SoFi stock at Neutral, while 44% rate shares at Buy and 6% at Sell.
Write to Emily Dattilo at [email protected]
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