Shares of financial technology companies such as SoFi (NASDAQ:SOFI) and Upstart (NASDAQ:UPST) had a tough start to 2024. For instance, SOFI stock dropped about 17% last week. Meanwhile, UPST lost about 19% of its value.
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For Upstart, there was no company-specific news that could justify a decline in its stock price. Its valuation is still a concern, though. On the other hand, KBW analyst Michael Perito downgraded SOFI stock to Sell on January 2, which led to a decrease in its share price.
With this backdrop, let’s look at what the Street recommends for SOFI and UPST stocks.
Is SoFi Stock Expected to Go Up?
SoFi continues to deliver solid financials despite macro headwinds. Moreover, the projected Fed rate cuts this year will act as a catalyst for the company, driving loan origination on its platform. However, SOFI stock appreciated nearly 71% in value in one year, implying that positives are already reflected in its current share price.
SoFi stock has received four Buy, five Hold, and three Sell recommendations for a Hold consensus rating. Further, analysts’ average price target of $8.58 suggests that the SOFI stock has a limited upside potential of 4.38% from current levels.
What is the Forecast for Upstart Stock?
Upstart stock will likely benefit from the expected decline in the interest rate in 2024. Further, the company’s focus on bringing more third-party capital to its platform to meet the borrower’s demand augurs well for growth.
However, UPST stock has gained nearly 147% over the past year, raising concerns over its valuation. The stock trades at a forward price-to-sales multiple of 5.56, higher than the sector median of 2.67. This is reflected in Wall Street analysts’ bearish outlook.
UPST stock has one Buy, four Hold, and five Sell recommendations for a Moderate Sell consensus rating. Further, analysts’ average price target stands at $22.50, implying 32.31% downside potential from current levels.
Bottom Line
While SoFi and Upstart are poised to capitalize on the expected decline in interest rates, their high valuations remain a short-term concern. While SoFi offers limited upside potential based on analysts’ average price target, UPST has notable downside potential.
