American personal finance and fintech company SoFi Technologies has rallied too high, according to four-star Bank of America analyst Mihir Bhatia, a four-star analyst according to Tipranks’ ratings. The analyst downgraded shares of SOFI stock from a Neutral rating to an Underperform rating alongside this warning. Bhatia maintained a $12 price target, representing a potential 24.67% downside for SOFI shares.
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The Bank of America analyst points to SoFi stock’s rally of more than 120% over the last three months as the reason for this downgrade. He claims that this rally has exceeded the stock’s value and that it will retreat back to more reasonable levels.
For the record, shares of SOFI are up 1.54% as of this writing. That builds on a 60.1% increase year-to-date and a 97.4% rise over the last 12 months.
What’s Behind the SOFI Stock Rally?
There are a couple of factors that have sent SOFI shares higher recently. Among these is the election of Donald Trump as the next President of the U.S. Republications have been vocal about wanting to reduce the government’s presence in the student loan market. If that happens after Trump takes office, it could be a boon to SOFI stock by increasing the number of student loans it issues in response to diminishing federal aid.
SoFi has also been rallying thanks to its Q3 earnings report released on October 29. Its EPS of 5 cents beat Wall Street’s 4-cent estimate while revenue of $989.49 million smashed analysts’ estimate of $631.6 million.
Is SOFI Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for SoFi Technologies is Hold based on five Buy, six Hold, and three Sell ratings over the last three months. With that comes an average price target of $11.46, a high of $19, and a low of $4. This represents a potential 27.65% downside for SOFI shares.
