Shares of SoFi Technologies (NASDAQ:SOFI) have lost plenty of value after registering stellar gains since the start of this year. For example, SoFi stock has lost over 34% of its value since July, raising concerns that it could head back under $5 to penny-stock territory (learn more about penny stocks here) amid the Fed’s toughened stance on interest rates. However, Jefferies analyst John Hecht thinks the opposite and expects SoFi stock to nearly double from current levels.
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In a note to investors dated September 19, Hecht wrote, “SOFI is growing nicely and scaling into several expansionary initiatives.” He reiterated a Buy recommendation on SoFi stock, while his price target of $15 implies upside potential of almost 100% from current levels.
A high-interest rate environment and the Fed’s tight monetary policy pose challenges for SoFi. However, the analyst noted that the large student loan refinancing market, as well as SoFi’s focus on improving margins, solid credit profile, and its bank charter, provide a solid foundation for growth. Additionally, SoFi’s deposit flows remain stable and are supporting the growth of its balance sheet, noted Hecht.
While Hecht is bullish on SoFi, let’s consider the consensus estimate for SoFi stock.
Is SoFi Stock Expected to Go Up?
SoFi is expected to benefit from the uptick in student loan refinancing volumes in the coming quarters. Further, the ongoing momentum in its Personal Loans business will support its financials. In addition, the company’s bank charter is boosting its low-cost deposit base and net interest margin.
However, headwinds from high interest rates and the soft home loan refinancing market pose challenges in the short term.
SoFi stock has received six Buy, seven Hold, and four Sell recommendations for a Hold consensus rating on TipRanks. Meanwhile, the average SOFI stock price target of $9.84 implies 30.8% upside potential from current levels.
Bottom Line
SoFi stands to gain from the strength in its Personal Loans business. Moreover, the increased home loan originations and the resurgence in student loan refinancing volumes augur well for growth. Additionally, its expanding low-cost deposits are expected to bolster its profit margins. However, the persistently elevated interest rates could hurt SoFi’s growth and restrict the stock from doubling in the near term.
In the meantime, investors can employ TipRanks’ penny stock screener to discover appealing penny stocks.
