Overview
Stephens updated its valuation on Pagaya Technologies, lowering the firm's price target to $25.00 from $33.00 while retaining an Overweight recommendation on the stock. Analyst targets for Pagaya span a range from $20.00 to $40.00, and the shares were trading at $14.19 at the time of the report, well below even the lowest target.
Earnings and guidance
Pagaya’s fourth-quarter results presented a mixed picture. The company reported Net Income and EPS that exceeded expectations, but Network Volumes and Revenues fell short of forecasts. Management’s guidance for 2026 also came in below what the market had anticipated, a development Stephens cited in its decision to lower its estimates. The stock has reacted sharply to the news, posting a 23.38% decline over the prior week and a 50.51% drop over the last six months.
Underwriting changes and credit performance
Management disclosed that it tightened underwriting by cutting certain tiers. Stephens indicated that those changes reduced Network Volume and, in turn, pressured Pagaya’s 2026 key performance indicators and guidance. Despite the contraction in volume, Stephens observed that credit performance remained consistent, noting there were no incremental write-downs recorded in the fourth quarter.
Supporting the view of resilient near-term liquidity, underlying data show Pagaya with a current ratio of 5.11, indicating liquid assets comfortably exceed short-term obligations.
Analyst perspective and street reactions
Stephens characterized the underwriting tightening as somewhat unexpected relative to other consumer finance companies that have reported so far, and the firm emphasized this was not a credit miss. Instead, Stephens suggested Pagaya may be taking a preemptive step ahead of potential credit deterioration. The research house kept its Overweight stance but reduced the price target driven by lower revenue and EPS estimates, noting the company’s prior trajectory for revenue and EPS growth "has been put on hold."
Separately, three analysts have revised their earnings estimates upward for the coming period, and consensus forecasts indicate that Pagaya is expected to be profitable this year. In other analyst activity, Citizens lowered its price target on Pagaya from $35.00 to $22.00 and maintained a Market Outperform rating, citing expectations for slower growth that could reduce operating leverage in the year ahead.
Recent reported figures
For the fourth quarter of 2025, Pagaya reported EPS of $0.80 versus an expected $0.35, equating to a 128.57% surprise to the upside. Revenue for that period was $334.81 million, below the forecast of $348.75 million, a shortfall that contributed to investor concern despite the strong EPS print.
Implications for investors
The combination of tightened underwriting, below-expectation volumes and revenue, and a shortfall in 2026 guidance helped push several analyst firms to re-evaluate forecasts and valuations. While credit metrics in the reported quarter did not show additional impairments and liquidity appears solid, the near-term growth trajectory has been interrupted, prompting valuation adjustments by sell-side analysts.
Conclusion
Stephens’ move to lower its price target while keeping an Overweight view reflects a recalibration of expectations after Pagaya’s Q4 results and its decision to tighten underwriting. The company’s credit performance in the quarter was steady, but reduced volumes and a softer outlook for 2026 have become focal points for analysts and investors assessing the stock.
Key points
- Stephens lowered Pagaya’s price target to $25.00 from $33.00 and maintained an Overweight rating.
- Pagaya beat Q4 expectations on Net Income and EPS but missed on Volumes and Revenue; 2026 guidance was below market expectations.
- Company tightened underwriting by cutting certain tiers, which reduced Network Volume; credit metrics showed no incremental write-downs in Q4 and liquidity remains strong with a current ratio of 5.11.
Risks and uncertainties
- Tighter underwriting may continue to depress Network Volume and revenue growth, affecting fintech and consumer finance market dynamics.
- Shortfall in 2026 guidance and lowered analyst estimates create downside risk for investor sentiment in the stock and could pressure valuations in the specialty finance sector.
- Even with stable credit performance in the reported quarter, future credit trends remain uncertain; management’s proactive tightening may or may not preempt future losses, which is an open uncertainty for risk-sensitive investors.