SoFi Technologies (SOFI) is poised to unveil its Q3 earnings on Tuesday, October 27, with Wall Street analysts anticipating earnings per share (EPS) of $0.17 and revenue of approximately $1.25 billion. The stock has faced significant challenges this year, down roughly 45%, and currently trades around $14.50.
Despite this decline, there’s optimism among some analysts. Monness Crespi Hardt analyst Gustavo Gala has initiated coverage with a Buy rating and set a price target of $20, suggesting a potential upside of about 40% from current levels. Gala believes the recent struggles are largely attributed to a one-time effect from interest rate resets, which he views as mostly hedged. He noted the stock’s valuation at 13.2x his FY28 earnings estimate, which positions it at the lower end of its trading range since late 2023.
SoFi’s deposits have reached $45.5 billion, primarily sourced from direct-deposit customers. This influx of capital supports lending to prime, high-income borrowers. In the second quarter, the company saw a 35% increase in member count and a remarkable 42% growth in product offerings, totaling 24.4 million. Notably, existing members opened 51% of new products, a significant rise from 35% the previous year.
However, Gala has cautioned that a potential earnings miss in Q3 could occur due to fair-value accounting on personal loans. He regards this as a temporary setback rather than a reflection of weak fundamentals.
Market Sentiment: Caution from KBW
In contrast, Keefe, Bruyette & Woods analyst Timothy Switzer maintains a Sell rating and has cut his price target from $16 to $15. Switzer estimates that increasing interest rates and balance sheet growth have created a gross headwind exceeding $1 billion prior to hedging, likely resulting in a less favorable revenue mix.
Despite his cautious stance, Switzer does anticipate that SoFi will meet Q3 consensus estimates. His primary concern revolves around sustained high loan growth and further declines in capital levels.
Overall, Wall Street’s sentiment towards SoFi is mixed, with the stock rated as a Moderate Buy—comprising nine Buy ratings, seven Holds, and three Sells. The average price target of $20.44 indicates a potential upside of 41.4%.
In terms of valuation, SoFi trades at a forward price-to-earnings ratio of roughly 24x, compared to Robinhood’s (HOOD) 44x. Additionally, options traders appear to lean bullish, with a put-to-call ratio of 0.50x for contracts expiring on October 30. The upper price point on these contracts is $15.66, suggesting a possible 8% increase by the end of the week.
