Big Analyst Revisions Could Be Ahead for SoFi Stock

There are a few things investors need to understand about Wall Street analysts. They are typically careful and wary of upgrading and boosting any company’s valuation or rating (no matter how justified) if the price is lagging behind the broader S&P 500 index or the industry peer group. The reason is simple: if they back a losing horse, their reputations and careers will be at risk.

This might be the case for shares of SoFi Technologies Inc. (NASDAQ: SOFI), as the stock had been falling behind the market indexes and peers in the real estate sector for a few quarters, only to start going on a rampant upward move in the past couple of months, one that is only getting started according to some of the macro data that is being posted in the United States economy.

For this reason, it might be overdue time for these analysts to revisit their valuation targets and ratings for SoFi stock, as the risk of landing on the “wrong side” of history is now lower than it was before. If this happens, and chances are it will, investors stand to profit from being early in that call and then riding the ensuing momentum higher that would come from such a shift.

SoFi Stock: In the Eye of the Hurricane 

Investors need to monitor two main indicators of SoFi’s exposure to mortgage financing. One is the mix between housing supply and building permits volume, both of which are reading at levels near the extremes of their respective cycles.

In other words, supply is now at a cyclical high while permits (as a consequence) are at a cyclical low. A return to normal will mean a surge in new demand for real estate financing through mortgages, and SoFi is poised to capitalize on this trend to drive up its valuation.

This is where the second indicator comes into play, which is where the Federal Reserve decides to drive interest rates. After the famous Jackson Hole symposium, Fed Chairman Jerome Powell hinted at the possibility of rate cuts being in place for September 2025, which, of course, will trickle down into lower mortgage rates.

That accommodative level of financing costs could be the spark that mortgage markets need to wake up, which is why SoFi stock is one of the names investors want to keep on their watchlist for a potential breakout in the coming months. With this fundamental tailwind in mind, investors must consider other factors to justify this view for the future.

Why Analysts May Need to Shift

As the consensus stands currently, Wall Street analysts see SoFi stock as a Hold valued at only $19.3 per share, which prices in a 22.6% downside potential. However, considering all of these factors working in the company’s favor, and the fact that the stock has rallied by 91.1% over the past quarter, this view may need to shift soon.

In fact, some of the other areas of the equation have already started to shift. When investors look at SoFi’s short interest, they will notice a 16% decline over the past month alone, showing a clear sign of bearish capitulation as short sellers realize that the risk-to-reward setup today significantly favors the buyers rather than the sellers.

Then comes the bottom-line earnings. During the latest quarterly financial release, SoFi reported 8 cents in earnings per share (EPS) compared to the 6 cents in EPS that the market was expecting. This near 50% beat on expectations sets the foundation for these analysts to start shifting into a more realistic view for the company’s future through higher targets.

Furthermore, these analysts also expect SoFi to report 12 cents in EPS for the second quarter of 2026, which may already account for many of the fundamental tailwinds discussed in the macro data. When it comes to whether the stock has priced in this future growth or not, the answer is a clear no.

Investors can keep track of this through the price-to-earnings-growth (PEG) ratio, which attempts to gauge today’s valuations compared to tomorrow’s EPS growth and tell the market whether growth has been priced into the stock’s price or not.

Any ratio below 1.0x indicates more upside potential for future growth. SoFi’s multiple of 0.6x suggests that retail investors may need to reassess analysts' overly cautious views on SoFi stock, given today’s consensus rating and valuation targets.

All told, this fundamental setup and undervalued potential in SoFi enticed some institutional buyers to step in and gain more exposure to SoFi stock. Over the past quarter, $866 million worth of buying took place to crystallize this sentiment and give investors another reason to consider the SoFi setup into the future.

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The article "Big Analyst Revisions Could Be Ahead for SoFi Stock" first appeared on MarketBeat.