SoFi Stock Has Sunk This Year. Why This Analyst Sees 64% Upside.

SoFi shares have fallen 42% this year as of the close of trading Monday. (Dreamstime)

Key Points

• StoneX analyst Mark Palmer initiates coverage of SoFi Technologies with a Buy rating and a $25 price target.
• SoFi shares have fallen 42% this year as of Monday’s close, but Palmer notes the drop doesn’t reflect the company’s strong core business.
• The analyst estimates SoFi’s new stablecoin transaction venture could boost fiscal year 2028 earnings by at least 25%.

SoFi Technologies stock has plummeted this year, but a Wall Street isn’t writing off the fintech giant yet.

SoFi, a digital neobank, has faced a challenging year as sticky inflation and high interest rates have weighed on fintech valuations. Though its consumer lending and banking services have grown, its tech platform segment suffered a steep revenue decline after losing a major client, hindering its push into enterprise infrastructure.

Though shares have tumbled 42% this year as of the close of trading Monday, StoneX analyst Mark Palmer noted that the drop in share price hasn’t reflected SoFi’s strong core business. The firm initiated coverage of the shares Tuesday with a Buy rating and $25 price target, suggesting 64% upside from the closing price of $15.23 on Monday.

Palmer noted the company had a record fiscal second quarter in which adjusted net revenue grew over 40% and the company added 1.1 million new members and 2.2 million new products.

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“A 40% price decline alone does not make a stock inexpensive, but such a drop paired with record operating progress and an underappreciated new business line does, in our view,” the analyst wrote in a note Tuesday.

Palmer added that while top-line growth has surged, SoFi’s overall profits didn’t jump as fast because the company spent heavily on marketing to attract new customers.

Another growth opportunity could come from SoFi’s new business venture. The company recently began settling its card transactions using its own stablecoin, called SoFiUSD, on Mastercard’s network. Though not yet factored into the current price target, the analyst estimated it could boost company’s fiscal 2028 earnings by at least 25%.

Wall Street analysts have remained cautious on SoFi stock. Of the 29 analysts polled by FactSet, 45% have a Hold rating on the stock while 38% remain bullish.

SoFi stock fell 0.7% to $15.13 in premarket trading Monday after closing down 3.6% Tuesday.

Investors also have high expectations for SoFi stock since it trades at growth-stock valuations rather than legacy bank multiples. Any failure to beat Wall Street’s estimates or issue stronger-than-expected guidance could trigger short-term volatility.

Write to Mariapaula Gonzalez at mariapaula.gonzalez@barrons.com

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