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SoFi (NASDAQ:SOFI) stock is experiencing an upsurge following the revision of the price target by Keefe, Bruyette & Woods (KBW).
Recently, the analysts at KBW increased the SOFI stock price target to $7.50 from $6.50, alongside elevating the rating to “market perform” from “underperform.” This upward adjustment comes after KBW had previously lowered the target to $6.50 from $7.50 in early 2024.
Despite lingering concerns about long-term earnings risk, KBW analyst Timothy Switzer believes that the stock has mitigated near-term downside risks through a significant 20% decrease this year and a recent capital infusion. SoFi unveiled a $750 million 1.25% senior convertible notes offering due in 2029, anticipating net proceeds of about $735 million.
KBW Analysts Boost SOFI Price Target to $7.50
Switzer highlights a recent surge in negative sentiment surrounding SoFi, with short interest as a percentage of float jumping to 23%, up from 13% at the start of the year. While this mounting pessimism could protect against sharp declines, it also sets the stage for a potential short squeeze, which occurs when short sellers rush to cover their positions by buying the stock. A short interest exceeding 10% is considered high, while surpassing 20% is deemed very high.
In a separate move this week, Needham initiated coverage of SOFI stock with a bullish price target of $10 and a “buy” recommendation. Analysts at Needham see SoFi as a standout player in the digital lending and neobanking sector, lauding its banking license and focus on high credit score customers. By emphasizing superior unit economics compared to rivals without a banking license, SoFi boasts potential for sustained growth.
Needham’s $10 price target hinges on a sum-of-the-parts (SOTP) valuation approach, attributing $8 per share to its lending business and $2 per share to its technology and fee-based operations.
Currently, SoFi boasts an average analyst price target of $9.19 among a group of 24 analysts providing coverage on the stock.
At the time of publication, Eddie Pan had no financial interest in the securities discussed. The opinions voiced are solely those of the author as per the guidelines outlined by InvestorPlace.com.
