Sticking With This SoFi Price Target as Big Money Comes to the Rescue

I just realized that I have not mentioned SoFi Technologies (SOFI)  to my "Stocks Under $10" readers in quite a while. In fact, the last time we even mentioned the stock with a chart attached was on October 1, when I warned that the shares were struggling to hold the $27 pivot created by the ascending triangle pattern of trend continuance back in early to mid-September. 

That's borderline unacceptable as this name is a top-five holding in terms of weighting in the Sarge-folio. To refresh, that ascending triangle developed atop a run that had been set up by an inverse head-and-shoulders pattern of bullish reversal:

The stock did rally out of the triangle but never reached my $33 target price. Then the shares ran into a bit of trouble and sold off with the regional banks last week. That said, SOFI rallied with the regional banks on Friday as well. ​

Earnings and Analysts

SoFi is set to report ahead of the opening bell next Tuesday (a week from tomorrow), one day ahead of the Fed's next FOMC policy decision. Wall Street is looking for a GAAP EPS of $0.08 on revenue of $893.5 million. That would be an improvement from the year-ago comp of $0.05 on annual revenue growth of roughly 29.6%.

Readers may recall that back in late July, CEO Anthony Noto increased previously issued full year guidance for net revenue, adjusted EBITDA and GAAP earnings per share. The last five analysts that have opined on SOFI have not been particularly kind. Fortunately, only two of those five bear any kind of worthy rating at TipRanks, while three are rated at either one or less stars out of five.

Last week, Tim Switzer (three stars) of KBW, reiterated his "sell" rating on SOFI, while taking his target price up $14 to $18. Earlier this month, Giuliano Bologna (four stars) of Compass Point also reiterated a "sell" rating on the shares, while increasing his target price from $6 to $12. All this really tells me is that these two have been wrong all along on this name and are trying to stay relevant should the stock sell off at some point.

The last truly positive opinion on the stock came from Dan Dolev of Mizuho in September. Mizuho has been right on the stock all along, and at that time, reiterated his "outperform" rating (which is a buy-equivalent) while increasing his target price to $31 from $26. Guess I am still the Wall Street high on this name, but we've been right on this stock since it traded in the mid-single digits.

New Trouble, Maybe​

Readers will see that ​SOFI has formed a double-top pattern of bearish reversal and that it has tried to reverse. The double top has a downside pivot of $25, but that's not the key spot here. The 50-day SMA (currently: $26.06) supersedes that spot as pivot and replaces my old $27 pivot as well.

The stock found support at its 50-day line on October 3, on October 14 and again on Friday. That's huge. To me, that means that professional money is defending that stock at that line. Until it cracks, at least for me, it's OK to add at the 50-day SMA. That said, while I see this as a bullish development that may or may not override the double top, if that line does crack, investors will need to be agile and at least respect the 8% rule for the portion added up here.

SoFi Technologies (SOFI)

Target Price: $33 (reiteration) 

Pivot: $26 (down from $27)

Add: At the 50-day SMA (currently $26)

Partial Panic: Loss of that line 

Panic: Loss of the 200-day SMA

At the time of publication, Guilfoyle was long SOFI equity.