Stock Analysis & Ideas

SoFi Stock: Buy the Dip or Bail? Analysts Weigh In

President Biden has once again extended the student loan moratorium, which will last through June 2023, with potentially another two months of payment pauses afterwards.

This puts more pressure on SoFi Technologies (SOFI) stock, as the fintech company makes money on student loan processing fees and thus the move will impact its revenue stream.

So, the latest news is not helpful to a stock which has suffered badly this year; the shares are down by 72% in 2022 alone. That said, Mizuho analyst Dan Dolev doesn’t think the latest extension will cut as deep as the prior one.

“Unlike following the extension in April, we believe that the impact to 2023 sales and profits should be less dramatic,” the analyst said. “This is primarily due to an already lower expectation for refinancing in the current high-rate environment.”

Nevertheless, Dolev still thinks the extension will impact revenue and adj. EBITDA, for which the analyst has lowered estimates for 2023 from $2.037 billion to 1.967 billion and from $306 million to $252 million, respectively.

The result is also a new price target, which has been trimmed down from $7 to $6, now making room for 12-month gains of 35%. Dolev’s rating stays a Buy. (To watch Dolev’s track record, click here)

That was not the only piece of bad news SoFi has received lately. Last week, a Senate Banking Committee asked for information regarding the company’s crypto trading activities, a hot topic right now what with FTX’s collapse and likely to put any crypto-related business under the lawmakers’ spotlight.

However, Oppenheimer’s Dominick Gabriele believes any impact from tightening the screws on digital asset trading will have a negligible effect on SoFi’s business. “SOFI only has $3.85M of related fees in 3Q22,” he explained, “insignificant from a revenue contribution basis.”

In fact, Gabriele thinks the latest “implied revenue reduction/cut in sentiment” pullback could offer a “solid long-term entry point” for SOFI shares. All told, then, the analyst maintains an Outperform (i.e., Buy) rating, backed by a $7 price target. The implication for investors? Upside of 57% from current levels. (To watch Gabriele’s track record, click here)

Overall, Wall Street analysts are almost split down the middle on this one; the stock claims a Moderate Buy consensus rating, based on 6 Buys vs. 5 Holds. However, regarding where the share price is heading, the outlook is far more conclusive; at $7.35, the figure implies shares will appreciate 65% over the coming months. (See SoFi stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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