Upgrade; "Oversold" Declaration Spark Internet Bank BofI

Jacob Harper |

In a stock move that so far appears to be fueled entirely by analyst bullishness, shares of the BofI Holding Inc. (BOFI) rose significantly on March 28. Analysts on both the fundamental and technical side predicted room for growth for BofI, triggering a buying frenzy that sent shares up nearly 13 percent on the day.

Raymond James looks to have started the rally for BofI with their upgrade right before the bell, changing their rating from "market perform" to outperform while raising their price target to $88 a share. At approximately the exact same time, Zacks raised their own Full-year EPS estimates 6 cents a share to $3.74 apiece while calling the stock oversold, citing the company’s unusually low RSI of 29.9.

The separate votes of confidence from both a technical and fundamental perspective ignited the rush to buy in. As the Friday trading session passed midday 620,000 shares had traded hands, representing more than double the average volume amount.

BofI is a lender with an unusual business model. BofI, which stands for "Bank of Internet," operates out of a single branch in San Diego, opting to operate almost entirety online. While a lack of personnel can certainly have a negative affect a bank’s ability to provide customer service, BofI CEO Garry Garrabrants claims this model also saves the company a significant amount of overhead, allowing them to offer customers higher deposit interest and lower loan rates than traditional brick-and-mortar banks can.

While unusual, the $3.6 billion asset bank’s model is not completely unique, with Los Angeles’ 1st Century Bancshares (FCTY) also running a “virtual bank” from just two physical locations. But while 1st Century has been relatively slow the last twelve months, gaining only 11 percent during a regional bank renaissance, BofI has skyrocketed.

Shares of BofI are up 112.44 percent from a year ago. While the stock had nudged down a slight 2.03 percent in 2014, those gains were easily recuperated on Friday.

BOfI retreated slightly after climbing as much as 13 percent on the day, and by 1:20 EST shares had gained 12.22 percent to hit $86.23 a share.

 

 

 

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