Top Needham Analyst Assigns SOFI Stock a Hold Rating, Says ‘Fully Valued' Ahead of Q2 Earnings
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Wall Street expects SoFi to report EPS (earnings per share) of $0.06, reflecting a significant increase from $0.01 in the prior-year quarter. Furthermore, revenue is expected to grow by 34% to around $802 million.
SOFI stock has rallied about 46% in the past month and has risen by an impressive 219% over the past year, thanks to its robust growth and solid execution amid challenging macro conditions.
Top Analyst Is Cautious on SOFI Stock Despite Multiple Strengths
Orenbuch stated that SoFi is a leading neobank that started its journey as a student loan refinance originator and has significantly increased the breadth and depth of its product offerings. He noted that the company offers a wide array of best-in-class products, including Money and Invest. These products and solutions are integrated into one platform, which enables the leveraging of customer acquisition costs.
Further, Orenbuch noted that the 2022 acquisition of a bank by SoFi Technologies allowed it to build its customer franchise with consumer deposits and further bolstered its position while increasing customer retention. He also noted the strategic acquisition of Galileo in 2020 and Technisys in 2022. Moreover, the analyst highlighted the fintech's recent announcement about re-entering the crypto space.
The analyst pointed out that despite higher interest rates, SoFi delivered a 37% compound annual growth rate (CAGR) in its revenue from 2021 to 2024. He also views SoFi's product diversification as a core strength, which allows it to sustain growth across changing macro conditions.
Despite all these strengths, Orenbuch has a neutral stance on SOFI stock due to valuation concerns. Orenbuch ranks 22 nd out of more than 9,800 analysts on TipRanks. Remarkably, he has a success rate of 71%, with an average return of 23.5% over a one-year period.
Is SOFI a Good Stock to Buy?
Like Orenbuch, Keefe, Bruyette & Woods analyst Timothy Switzer also highlighted several positives, mainly the revenue opportunities from crypto and the significantly expanded student lending opportunity following the passage of U.S. President Donald Trump's 'Big, Beautiful Bill.' While Switzer increased the price target for SOFI to $13 from $9, he reiterated a Sell rating, saying that the stock has 'run past fundamental value despite the company's exciting growth prospects and strong value proposition.'
With eight Buys, six Holds, and three Sells, Wall Street has a Moderate Buy consensus rating on SoFi Technologies stock. At $15.58, the average SOFI stock price target indicates a downside risk of about 26% from current levels.
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