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Piper Sandler’s rating on the stock went from Overweight to Neural with a price target of $8, and Bank of America’s rating went from Buy to Neural with a price target of $10.
The stock closed at $9.55 on Thursday.
The downgrades from BofA and Piper followed a separate downgrade on Wednesday from Outperform to Market Perform by analysts at Oppenheimer, bringing the total number of downgrades to three in as many days.
Despite the apparent negativity, based on comments from all three firms, SoFi’s issues appear to be tied to the stock’s quick rise, not major concerns about the fundamentals of its business.
Discussing the downgraded, BofA analysts said, “SoFi Technologies (SOFI) shares are up 100% over the past month vs. a 7% increase in the S&P 500, mainly because the debt deal brought certainty that the Federal Student Loan payment moratorium would end in September. While we agree the payment moratorium expiry is a positive, we now see the positive fundamental aspects of the story as largely priced in.”
Piper Sandler analysts explained the firm’s downgrade: “The change in our rating is primarily due to valuation. SOFI is up 107% YTD compared to consumer lending peers +15% on average and a basket of fintech stocks down ~10%.”
Although they downgraded the stock, analysts think some outperformance is warranted.
“…if we were to see a significant decline in interest rates driving better margins and more attractive lending opportunities (i.e. student loans). However, we have seen rates actually move higher in the past two months, which will be an incremental headwind in the near-term, and we are increasingly concerned rates could remain higher for longer due to persistent inflation.”
Overall, Piper Sandler continues to think SoFi will be a long-term winner.
