The Ratings Game: SoFi stock gives back its post-earnings gains, with one analyst highlighting its ‘polarizing’ nature

by | Nov 2, 2022 | Stock Market

SoFi Technologies Inc. is a “polarizing” stock, according to a Keefe, Bruyette & Woods analyst, and that can perhaps be seen in its recent price movement. The stock was up as much as 18.9% Tuesday after the company topped expectations with its latest results, but it pared back those gains and ended the session up just 5.3%. In Wednesday’s session, SoFi’s stock
SOFI,
-10.38%
is off 7.7%, having given up all its post-earnings gains.

SoFi “clearly has some earnings tailwinds as it relates to the bank and balance sheet growth, but also some questions around loan origination and sale fees, in addition to the lower technology revenue/profit run-rate,” Keefe, Bruyette & Woods analyst Michael Perito wrote in a note to clients. SoFi’s banking business has been the “engine” behind its upbeat earnings reports this year, as the company benefits from “a larger balance sheet and strong loan origination capacity,” according to Perito. But he’s still taking a cautious view on the stock. “Until earnings visibility improves, we think it will be challenging for SOFI to sustain any relative momentum in the current macroenvironment,’ Perito wrote. “The good news, however, is that capital and liquidity ratios are strong, giving the company a healthy amount of capacity to support balance sheet growth and ride out a bumpy economy, should one materialize in 2023.” He has a neutral rating and $6 price target on the shares. Others were more upbeat, including Eugene Simuni of MoffettNathanson, who called 2022 a “bumper year” for SoFi’s personal loans business. And he thinks there’s more to the company’s story. “The success of the firm’s Personal Loan franchise has allowed SoFi to consistentlybeat c …

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