Does SoFi Technologies, Inc. (SOFI) Have the Potential to Rally 132% as Wall Street Analysts Expect? – Yahoo Finance
Shares of SoFi Technologies, Inc. (SOFI) have gained 4.9% over the past four weeks to close the last trading session at $5.34, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $12.38 indicates a potential upside of 131.8%.
The average comprises 12 short-term price targets ranging from a low of $7.50 to a high of $30, with a standard deviation of $6.91. While the lowest estimate indicates an increase of 40.5% from the current price level, the most optimistic estimate points to a 461.8% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.
But, for SOFI, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company’s ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn’t gauge how much a stock could gain, it has proven to be powerful in predicting an upside.
Price, Consensus and EPS Surprise
Here’s What You Should Know About Analysts’ Price Targets
According to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company’s fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock’s price movement. While that doesn’t necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why SOFI Could Witness a Solid Upside
There has been increasing optimism among analysts lately about the company’s earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 3.5%, as five estimates have moved higher compared to no negative revision.
Moreover, SOFI currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than the 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock’s potential upside in the near term. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, while the consensus price target may not be a reliable indicator of how much SOFI could gain, the direction of price movement it implies does appear to be a good guide.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Related Quotes
The sudden collapse of FTX, the world’s third-largest cryptocurrency exchange, underlines how important it is for any investor to learn about the risks taken when money is parked with a lightly regulated firm. Sam Bankman-Fried resigned his position as CEO and was replaced by John J. Ray III, a lawyer who has worked on the bankruptcies of Enron, Nortel Networks and many other companies. FTX, based in the Bahamas, held about $16 billion in customer assets but had lent about $10 billion of that to Alameda Research, a trading firm also run by Bankman-Fried and headquartered in Hong Kong, according to a Wall Street Journal report.
Billionaire Dallas Maverick's owner Mark Cuban recently offered his perspective on the recent implosion of crypto platform FTX.
Since hitting an all-time high roughly one year ago, the Nasdaq has plunged as much as 38%. This entrenches the index that was largely responsible for pushing the broader market to new heights in a bear market. Although bear markets can, at times, be scary for new and tenured investors alike, the rewards of patience can easily outweigh those fears.
The demise and bankruptcy of crypto brokerage FTX will not be the last downfall in the industry, Binance's CEO predicts.
Ex-FTX CEO Sam Bankman-Fried lost his entire $16 billion fortune in less than a week after his company filed chapter 11 bankruptcy protection on Friday.
Bitcoin has dropped 77% from its trading peak in November of last year to the latest blizzard of the crypto winter: FTX’s implosion and bankruptcy.
"FTX Group Companies commence voluntary Chapter 11 proceedings in the United States," the firm said in a statement posted on Twitter. Founding CEO Sam Bankman-Fried also resigned, FTX said in the statement. "In order to begin an orderly process to review and monetize assets for the benefit of all global stakeholders, John J. Ray III has been appointed Chief Executive Officer of the FTX Group," FTX said.
In this article, we will take a look at the 15 most valuable NASDAQ companies in the world. If you want to see more of the most valuable NASDAQ companies in the world, go directly to 5 Most Valuable NASDAQ Companies in the World. When most people hear NASDAQ, they think of technology given that […]
Markets were clearly ready for some good news, and drove a massive rally. But while the October CPI showed some slowing, it’s just one month, and labor markets continue to be tight.
In this article, we shall discuss the 12 best depressed stocks to buy now. To skip our detailed analysis of the global economic outlook in 2022, go directly and see 5 Best Depressed Stocks To Buy Now. The global macroeconomic outlook continues to be in free-fall, with an increasingly grim outlook for the rest of 2022 […]
Lessons from the FTX collapse center more around accounting than crypto complexity, believes ex-Treasury Secretary Larry Summers.
FTX founder Sam Bankman-Fried reportedly denied speculative reports that he had flown to South America after the cryptocurrency exchange filed for bankruptcy.
Finding solid returns is the goal of the game when it comes to stock investing, and investors of all stripes are always on the lookout for a reliable strategy. One common mode, followed by retail investors seeking accurate clues for stocks on the way up, is keep track of insider trades. Corporate insiders are company officers, in high positions, with responsibility to Board members and shareholders alike for bringing in profits and stock price gains. Their positions give them a deeper knowledge
Shares of energy company Algonquin Power & Utilities (NYSE: AQN) fell as much as 19.5% in trading on Friday after the company reported third-quarter 2022 financial results. Adjusted net earnings fell 25% to $73.5 million, or $0.11 per share. Management said that higher interest payments and a reduction in tax subsidies were the reason for the shortfall.
(Bloomberg) — As US stocks surged to the best day in two years, one of the market’s most reliable group of buyers was nowhere to be found. Most Read from Bloomberg‘It’s All Gone’: FTX Bankruptcy Has Retail Traders Bracing for LossesBankrupt FTX Hit by Mysterious Outflow of About $662 MillionBankman-Fried’s Assets Plummet From $16 Billion to Zero in DaysElizabeth Holmes Asks for a Lenient 18-Month Sentence at HomeDemocrats Defy History, Keep Senate Control in Victory for BidenDay traders dumped
One of Wall Street's most implacable bulls has laid out his argument for why he thinks U.S. stocks can continue to rally into year's end after Thursday's game-changing October inflation data.
Sometimes, a single new data point can break up the most complacent of outlooks. After 10 months of markets trending down, inflation rising, and the Federal Reserve hiking interest rates, it was only natural to assume that the rest of the year held more of the same. And then October’s inflation print broke that mold. It came in at 7.7% annualized, significantly less than the 8% expected. While still near 40-year highs, and still up 0.4% month-over-month, the October number indicates that the rat
A lot of blue chip stocks have the blues. Sure, the Dow Jones Industrial Average is no longer in bear market territory. However, the index remains down more than 10% year to date, and nearly two-thirds of the Dow's 30 stocks are in the red.
FTX auditor Prager Metis reported the company earned $1 billion in revenues in 2021. An investigation from CoinDesk reveals Prager Metis also operates in Decentraland, where it sponsors the “Decentraland Babydolls.”
On a recent Wednesday afternoon in Shanghai, the founder of a semiconductor start-up spotted the head of a well-known chip venture capital firm near the elevator at an industry event – and grabbed the chance for a 60-second "elevator pitch". The venture executive walked away and the entrepreneur was left with a sense of foreboding. "I'll run out of money soon if there's no new investment," said the founder, who declined to be named because of the sensitivity of the topic. "It is not as easy as t