SoFi (NASDAQ:SOFI) reported its earnings this week, sending its shares higher by more than 20%. However, most of those gains have now been erased.
This morning, Morgan Stanley analyst Jeffrey Adelson lowered his price target to $6.50 from $7 while lowering the rating to “underweight” from “equal weight.” In October, Adelson upgraded SOFI stock to “equal weight” from “underweight.” This was because SoFi had announced a $2 billion forward flow agreement while its share price had come down to Adelson’s price target of $7.
The analyst noted that SOFI is now 20% higher than when compared to October while trading at a price to tangible book value (P/TBV) of 2.4x. As a result, Adelson believes that SOFI “is pricing in too much optimism on the path to 2026 profitability laid out by SOFI, all while staring in the face of a worsening top-line growth outlook for 2024.” He noted in October that SoFi should be valued like a bank.
SOFI Stock: Morgan Stanley Cuts Price Target to $6.50
Past 2024, Adelson believes that SoFi’s medium-term outlook carries more downside risk than upside risk, despite revenue guidance of between 20% to 25% until 2026.
SoFi has guided for 2024 Q1 adjusted net revenue between $550 and $560 million. Lending revenue in 2024 is expected to fall between 5% and 8% when compared to 2023 lending revenue.
“Still, we walked away from 4Q23 earnings with a more negative outlook on lending, or the largest part of SOFI’s business,” said Adelson. The analyst believes 2024 lending revenues could fall by more than the consensus estimate.
On TipRanks, Adelson is ranked at No. 2,891 out of 8,695 total analysts. He carries a success rate of 59% with an average one-year return of 11.6%.
Following earnings, Goldman Sachs analyst Michael Ng raised his price target to $8 from $7. Meanwhile, Deutsche Bank analyst Mark DeVries raised his price target to $12 from $11.
SoFi carries an average price target of $9.25 among 18 analysts with coverage of the stock. That implies upside of about 15% from current prices.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
