Why BofA Downgrades SoFi Technologies, Despite Upbeat Q4

SoFi Technologies Inc SOFI reported strong fourth-quarter results after the closing bell on Tuesday. The company has also issued its 2022 guidance ahead of Street expectations, driven by “benefits from its recently approved Bank Charter,” according to BofA Securities.

The SoFi Technologies Analyst: Mihir Bhatia downgraded the rating for SoFi Technologies from Buy to Neutral while keeping the price target unchanged at $14.

The SoFi Technologies Thesis: Shares of the company jumped 18% in after-hours trading and the risk-reward seems “more balanced from here,” Bhatia said in the downgrade note.

“A core plank of our Buy thesis was that the street was underestimating the potential upside from the Bank Charter in 2022 numbers. With guidance now reflecting this upside, the story turns to execution,” the analyst wrote.

Although SoFi Technologies has executed well to date, the 2022 guidance is back-end loaded and “we think it could take some time for investors to gain confidence it can be achieved,” he added.

SOFI Price Action: Shares of SoFi Technologies had risen by 6.79% to $11.96 at publication Wednesday morning.