KBW downgraded SoFi from neutral to underperform and raised their price target from $7 to $8. The main reason for the negativity is something I candidly find erroneous at this point… sort of like the boy who cried wolf without there ever actually being a wolf there. It’s a very similar note to the one KBW sent out last January, before SoFi aggressively rallied and doubled throughout the year.
The KBW analyst doesn’t believe in SoFi’s 2026 targets and thinks it will fall short of multi-year guidance. It also thinks that investor optimism has more to do with who was elected president instead of how good SoFi’s results have been and how sharply hawkish policy has flipped dovish. I don’t agree at all. KBW has never been a believer in SoFi as a company and searches for reasons to denigrate the business case as it continues to perform and the stock marches higher. Still, they’re entitled to their opinions and it’s always valuable to understand where they’re coming from. In this case, I just don’t find their views compelling and here I’ll explain why that is.
Let’s revisit for a moment what is actually included in SoFi’s 2026 guidance. The 2026 estimates were set at the beginning of 2024 and do not rely on an ounce of macro improvement. They simply assumed that terrible macro wouldn’t get any worse. In reality, the environment has already brightened. Rate cuts that leadership was loudly rooting for have come. These feed SoFi’s ability to confidently originate loans for its own balance sheet while improving capital market liquidity and allowing it to sell larger pools of loans to eager buyers. This dynamic meaningfully bolsters SoFi’s ability to service demand within its largest, most profitable segment, which should mean upside vs. its $0.67 2026 EPS target if anything.