SoFi Technologies Inc (NASDAQ:SOFI) shares are dropping Monday. Keefe, Bruyette & Woods lowered its price target on the stock. Here’s what you should know.
- SoFi Technologies stock is showing weakness. What’s driving SOFI stock lower?
Analyst Sees Rate Headwinds, Capital Pressure at SoFi
Timothy Switzer, an analyst at Keefe, Bruyette & Woods, reiterated Underperform on SoFi on Monday and reduced the price target to $15 from $16. Switzer tied the move to SoFi’s coming third-quarter report, and said the firm prefers to stay cautious.
Switzer first raised concerns in the firm’s second-quarter recap. SoFi’s fair value accounting leaves little room to meet guidance in quarters when rates spike, Switzer said, unless the company draws down capital at a faster pace.
In the third quarter, rates moved higher while SoFi’s balance sheet swelled. Switzer puts the combined cost at more than $1 billion for the quarter, a figure that excludes any relief from hedges. The likely outcome is another round of strong loan growth and a thinner capital cushion.
Switzer’s expectations still have SoFi matching consensus estimates and company guidance this quarter. Yet the more than $1 billion hit puts that outcome at real risk, Switzer said. The analyst expects the pressure to leave SoFi with a weaker revenue mix and less capital, which underpins the underweight view.
SOFI Shares Are Dipping
SOFI Price Action: SoFi shares were down 2.78% at $15.36 at the time of publication on Monday. The stock is trading near its 52-week low of $14.88, according to Benzinga Pro.
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