"Bank of America's underperform rating centers on SoFi's valuation, which the firm views as overstretched. The $20.50 price target is derived from applying a 22 times multiple to its 2027 adjusted earnings estimate of $0.93 per share . This reflects a belief that the stock's current price, trading around 45 times forward earnings, leaves little room for further gains. Bhatia highlighted that despite SoFi's progress, the market has already priced in much of its growth potential, limiting upside at these levels."
"A key focus was SoFi's capital raises in 2025. The company completed a $1.7 billion equity offering in the third quarter, followed by another in December, issuing 54.5 million shares for $1.5 billion, bringing the total to over $3 billion. While Bank of America acknowledged these as providing "ammunition" for continued expansion, the raises introduce dilution for existing shareholders and raise questions about efficient capital use. The firm noted the funds are for general corporate purposes, but expressed skepticism about their impact."
Bank of America resumed coverage with an underperform rating and a $20.50 price target derived by applying a 22 times multiple to SoFi's 2027 adjusted earnings estimate of $0.93 per share. The firm views SoFi's current valuation, trading around 45 times forward earnings, as overstretched and believes limited upside remains at those multiples. SoFi completed two capital raises in 2025 totaling over $3 billion, including a $1.7 billion offering in Q3 and a $1.5 billion December issuance of 54.5 million shares. Bank of America acknowledged the funds provide ammunition for expansion but raised concerns about dilution, efficient capital use, and the likelihood that any acquisitions would be smaller, complementary deals.
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