Shares of fintech platform SoFi Technologies (NASDAQ:SOFI) have declined 28.5% year-to-date but have risen about 17% over the past year. Ahead of the digital financial services provider’s first-quarter results on April 29, Wall Street’s sentiment is mixed on SoFi stock. While some analysts have recently expressed their optimism about the company’s prospects, others remain cautious due to the potential rise in credit risk if macro conditions worsen.
SoFi’s Impressive Recent Performance
Earlier this year, SoFi impressed investors after reporting its first-ever quarterly profit for the fourth quarter of 2023. A 35% revenue growth and margin expansion drove the solid performance in the quarter.
The company added 585,000 new members in Q4 2023, bringing the total member count to more than 7.5 million at the end of 2023. Further, the company had 11.1 million products at the end of 2023, with product additions of 695,000 in the fourth quarter.
SoFi has been experiencing solid momentum in its personal loans business, which accounted for over 79% of total loan origination volume last year. However, there are some concerns that defaults might rise amid stubborn inflation and higher interest rates.
Looking ahead, the company expects 20% to 25% EPS growth beyond 2026, driven by continued growth in its core business and the addition of new business lines.
Coming to Q1 estimates, analysts expect SoFi to report earnings per share (EPS) of around $0.01 compared to a loss per share of $0.05 in the prior-year quarter. They forecast GAAP revenue of $553.81 million, reflecting year-over-year growth of more than 17%.
Analysts’ Mixed Views on SoFi Stock
Recently, Citi analyst Ashwin Shirvaikar resumed the coverage of SOFI stock with a Buy rating, citing the fintech’s recent financing initiatives that are expected to generate savings of $40 million to $60 million in interest and preferred dividend payments.
Shirvaikar is encouraged by the company’s business diversification plans and ability to attract deposits. He expects SoFi’s student loan refinancing origination to pick pace later this year, given the end of the moratorium period for student loan repayments.
Meanwhile, Deutsche Bank analyst Mark DeVries reiterated a Hold rating on SoFi stock with a price target of $12. DeVries thinks that the market’s adverse reaction to SoFi’s recent convertible debt issuance was disproportionate, as management cleared that EPS will not be diluted following the transaction due to the expected interest and preferred dividend savings.
That said, DeVries remains on the sidelines because he views SOFI as a “show-me story” and believes that the company’s non-lending segments need to display consistent growth to justify the stock’s valuation.
Is SOFI Stock a Good Buy?
Wall Street is sidelined on SoFi Technologies stock, with a Hold consensus rating based on four Buys, eight Holds, and four Sells. The average SOFI stock price target of $8.91 implies 25.3% upside potential.
Conclusion
SoFi impressed investors with its Q4 performance and first-ever profit. However, Wall Street remains cautious due to an uncertain macro environment. If SoFi continues to report a positive bottom line in the upcoming quarters, it might improve investor sentiment about the company’s ability to generate profits consistently and boost the stock.
