SOFI Stock Gains Spotlight As Softer CPI Data Boosts Rate Cut Expectations

• Softer-than-expected CPI data is expected to pave the way for the Federal Reserve to cut the policy rate at its October meeting, according to an expert.
• Lower interest rates could spur demand for SoFi’s consumer and personal loans.
• JPMorgan, Truist increased their price target on SoFi technologies.

SoFi Technologies Inc. (SOFI) stock came under retail investors’ spotlight after the latest Consumer Price Index (CPI) data showed a 0.3% increase in overall prices in September.

The softer-than-expected CPI data is expected to clear the way for the Federal Reserve to lower interest rates at its next policy meeting, according to Eric Gerster, Chief Investment Officer, Alphacore Wealth Advisory, as cited by Reuters.

Data from the CME FedWatch tool shows there is a 96.7% probability of a 25 basis point cut in the October meeting.

According to data from MarketWatch, the Dow Jones estimate was for a 0.4% increase in CPI for September, while the annual rate was forecast to be at 3.1%.

How Does A Rate Cut Benefit SoFi?

If anticipated interest rate cuts occur, the lower-rate environment could drive higher demand for consumer and personal loans, two categories where SoFi has actively expanded its footprint. 

SoFi Technologies’ stock traded over 2% higher on Friday, after the morning bell, and it was among the top five trending equity tickers on Stocktwits. Retail sentiment around the stock trended in the ‘extremely bullish’ territory.

A bullish Stocktwits user said stocks like SOFI “are the cleanest proxy for a rate-cut rally.”

The company is scheduled to report third-quarter earnings on October 28. Analysts expect SoFi to report a revenue of $893.47 million and earnings per share (EPS) of $0.08, according to FiscalAI data.

JPMorgan analyst Reginald Smith raised the price target on SoFi Technologies to $26 from $24 while maintaining a ‘Neutral’ rating, citing the company’s history of "beating and raising" expectations. 

Truist lifted its price target on SoFi to $29 from $23 and maintained a ‘Hold’ rating. The firm highlighted that the third-quarter results are expected to remain strong due to sustained consumer spending. 

Also See: IBM Runs Key Quantum Algorithm On Commonly-Available AMD Chip: Report

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