SoFi Technologies Inc (NASDAQ:SOFI) stock fell 1.63% (As on June 20, 1:28:00 AM UTC-4, Source: Google Finance) after several Wall Street firms downgraded the company.
Piper Sandler downgraded the company to Neutral from Overweight with a price target of $8, up from $6.50. The downgrade is primarily due to valuation as SoFi is up 107% year-to-date compared to consumer lending peers up 15% on average, the analyst tells investors in a research note. According to the firm, some stock outperformance YTD would have been warranted, particularly if interest rates declined driving better margins and more attractive lending opportunities. However, rates actually moved higher in the past two months, which will be an incremental headwind in the near term, and Piper is increasingly concerned rates could remain higher for longer due to persistent inflation. BofA also downgraded SoFi Technologies to Neutral from Buy with a price target of $10, up from $9.50.
Moreover, Oppenheimer also downgraded the company, moving its rating to Perform from Outperform. The Oppenheimer analyst specifies that this downgrade is purely based on the valuation of SOFI stock. This downgrade is purely on valuation after what the analyst suspect is a significant short squeeze on a likely bear thesis based on account changes away from fair value accounting, inflated assumptions by management, capital capacity and worries about credit quality. Despite the downgrade, the Oppenheimer analyst has high hopes for SoFi in 2024. He upgraded his revenue estimate in this note from $2.4 billion to $2.6 billion. To put that in perspective, Wall Street is looking for SoFi to report revenue of $2.48 billion.
JPMorgan downgraded Mersana Therapeutics to Neutral from Overweight and cut its price target to $5.00 from $11.00. This is following a partial clinical hold on UP-NEXT and UPGRADE-A clinical trials. JPMorgan said it was wrong to upgrade the company in March, adding that even with the assumption that UPLIFT readout by early August will be positive from an efficacy standpoint, the previous bullish thesis is not warranted given concerns on its eventual approvability in the U.S. and commercial attractiveness.
On the other hand, first quarter adjusted net revenue of $460.2 million was up 43% from the same prior-year period’s $321.7 million. First quarter record adjusted EBITDA of $75.7 million increased 8% sequentially. SoFi achieved positive variable profit in the Financial Services segment for the first time and is on track for contribution profit by year end. SoFi recorded a GAAP net loss of $34.4 million for the first quarter of 2023, an improvement from the prior-year period’s net loss of $110.4 million.