SoFi Technologies (SOFI) stock has risen 12% over the past month and about 54% year-to-date. The stock continues to rally, as investors are impressed with the fintech company and digital bank’s strong execution despite macro challenges and a rapidly expanding customer base. The continued rise in SOFI stock defies the cautious stance of most analysts covering the stock and the downside risk implied by Wall Street’s average price target.
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Analysts Have a Cautious Stance on SOFI Stock
SoFi Technologies reported a 43% year-over-year growth in its Q2 revenue to about $855 million, with the company attributing this growth to record-high new members, new products, and an increase in fee-based revenue. Notably, Q2 saw 850,000 new member additions, resulting in a 34% year-over-year growth to 11.7 million.
While many analysts acknowledged the company’s solid financials, they are cautious due to several reasons, including macro uncertainties and elevated valuation.
Recently, Redburn-Atlantic analyst Harry Bartlett initiated coverage on SoFi Technologies stock with a Hold rating and price target of $20.50. The analyst noted that the popularity of the company’s core deposit and lending products is evident, given that it continues to win customers from larger banks due to its superior user experience and competitive rates.
That said, Bartlett sees challenges in building best-in-class products in the credit card and retail investing markets, where the significant investment required to be competitive could impact the potential returns over the next few years. Given the recent rally, the analyst sees limited upside over the next 12 months.
Meanwhile, Bank of America Securities analyst Mihir Bhatia raised the price target for SoFi Technologies stock to $15 from $13 in reaction to the strong Q2 print but retained a Sell rating. The 4-star analyst acknowledged that SoFi’s performance and management execution so far have been solid. Bhatia highlighted that the Financial Services and Lending account additions and monetization continue to support SoFi’s long-term growth. He expects new products and the reintroduction of crypto to SoFi’s platform to help consumer engagement. Despite these positives, Bhatia has a bearish stance as he believes that SOFI stock is “priced to perfection.”
Is SOFI a Good Stock to Buy?
Overall, Wall Street is sidelined on SoFi Technologies stock, with a Hold consensus rating based on 11 Holds, six Buys, and four Sell recommendations. The average SOFI stock price target of $19.85 indicates a 16% downside risk from current levels.
