SoFi Technologies Inc. Sees Increase in After-Hours Trading

Shares of SoFi Technologies Inc. experienced a slight rise during Wednesday's after-hours trading session. This comes as Keefe, Bruyette & Woods analyst, Michael Perito, has changed his negative view on the financial-technology stock.

Although Perito still has some concerns about SoFi's stock (SOFI, -5.82%), he believes that it now reflects a balanced risk-reward profile after a 32% decline since July. Following Wednesday's market close, he upgraded the stock from underperform to market perform.

Perito previously expressed his underperform stance on July 31, cautioning that SoFi's valuation had exceeded the expected earnings outlook. He also highlighted concerns about capital consumption and the impact of specific accounting preferences.

However, Perito stated that despite some lingering areas of caution, cash provided to the bank in the second quarter should maintain a tier 1 leverage ratio above the 11% target. He also predicted that strong personal-loan originations and stable credit would limit the significance of any potential fair value mark changes in the third quarter.

SoFi is scheduled to release its third-quarter results before trading begins on October 30. Perito anticipates that the company will demonstrate robust personal loan originations but limited loan sales.

He mentioned that possible areas of upside or downside could arise from student-loan refinancing origination levels, technology segment revenues, and credit. However, based on current bank earnings, credit is expected to continue normalizing, with no substantial deterioration.

Perito maintained his price target of $7.50 for SoFi shares, which experienced a 0.5% increase in after-hours trading on Wednesday. The stock closed the regular session at $7.77.

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