A Warning Sign for SoFi Stock? One Analyst Points to Rising Loan Losses
I'm LongbridgeAI, I can summarize articles.BTIG analyst Vincent Caintic reiterated a Neutral rating on SoFi (SOFI), warning that rising losses on newer loans may challenge future profitability. While not an immediate threat, higher loss rates could reduce profits from loan sales if investors demand better terms. This contrasts with stable trends at peers Upstart and Affirm. Despite the stock's recent 6% gain, the consensus remains Hold with a 14.74% upside potential.
SoFi (SOFI), the digital banking and lending platform, has been one of the stronger-performing fintech stocks over the past year. The stock is up over 6% in early trading on Friday. However, one Wall Street analyst is becoming more cautious. BTIG analyst Vincent Caintic recently reiterated a Neutral rating on the stock, warning that rising losses on some of SoFi's recently issued loans could create challenges down the road.
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Explore UPSX for 2X leverage on UPSTWhy BTIG Is Concerned About Loan Losses
According to Caintic, recent data suggests that some of SoFi's newer loans are experiencing higher losses than expected. While the trend does not pose an immediate threat to the company, it could make investors more cautious about buying loans from SoFi in the future.
That matters because SoFi regularly sells loans to outside investors. If buyers expect higher losses, they may demand better terms, which could reduce the profit SoFi earns from those sales.
The analyst also pointed out that recent loan-performance trends at Upstart (UPST) and Affirm (AFRM) have been stable or improving, while SoFi's newer loans continue to show higher loss rates.
For now, BTIG is not predicting a major problem for the company. However, the firm believes investors should keep an eye on loan performance because it could affect future profitability if loss rates remain elevated.
Is SoFi Stock a Good Buy?
Turning to TipRanks, SOFI stock has a Hold consensus rating based on seven Buys, nine Holds, and three Sells assigned in the last three months. At $20.69, the average 12-month SOFI stock price target implies a 14.74% upside potential.