Shares of fintech platform and online bank SoFi Technologies (SOFI) have rallied 102% over the past six months, driven by solid Q3 results, strong execution, and the company’s strategy to shift towards fee-based revenue streams. Moreover, a lower interest rate backdrop is expected to boost the company’s lending business. While several analysts are optimistic about SoFi’s long-term prospects, they remain cautious ahead of the upcoming Q4 results due to the stock’s elevated valuation following the rally in recent months.
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Expectations from SoFi’s Q4 Results
SoFi Technologies is scheduled to announce the results for the fourth quarter of Fiscal 2024 on January 27. Analysts expect the company to report an adjusted EPS (earnings per share) of $0.03 compared to $0.02 in the prior-year quarter. The fintech company has exceeded analysts’ earnings expectations for five consecutive quarters.
Notably, SoFi delivered stellar third-quarter results, with CEO Anthony Noto calling it “the strongest quarter” in the company’s history. Highlighting the shift towards capital-light, higher ROE (return on equity), and fee-based revenue streams, the CEO stated that the company’s Financial Services and Tech Platform segments now constitute 49% of the overall adjusted net revenue compared to 39% a year ago. In fact, revenue from these two businesses increased by a combined 64% year-over-year in Q3 2024.
Analysts Have Differing Views on SOFI Stock
Despite solid financials, analysts are divided on SOFI stock. Earlier this month, analysts from Barclays and Deutsche Bank raised their price target for SoFi stock but reiterated a Hold rating.
Meanwhile, KBW analyst Tim Switzer downgraded SoFi stock to Sell from Hold at the beginning of this month. While the analyst acknowledged positives like a lower interest rate environment and SoFi’s enhanced scale and profitability, he lowered his rating due to the stock’s “overstretched” valuation. Switzer also finds the company’s long-term target of 20%-30% return on tangible common equity (ROTCE) quite ambitious.
In contrast, on Tuesday, Citi analyst Andrew Schmitt reiterated a Buy rating on SoFi stock and raised the price target to $18 from $12.50 as part of the 2025 preview for the fintech sector. The analyst noted that investor interest in fintech continues to grow, reflecting improvement in the sector since the U.S. presidential elections. Schmitt expects further momentum in 2025, given the stable macro backdrop, reduced regulatory pressures, and the possibility for further acquisitions.
Is SoFi Stock a Buy, Sell, or Hold?
Overall, Wall Street is sidelined on SoFi stock ahead of the upcoming results. With five Buys, five Holds, and four Sells, SoFi Technologies stock scores a Hold consensus rating. The average SOFI stock price target of $13.19 implies a downside risk of 9% from current levels.
