Assessing Bank of America's Neutral Rating on Figure Technology Solutions in a Volatile Tech Sector

The recent initiation of a "neutral" rating and $41 price target by Bank of America (BofA) on Figure Technology Solutions Inc. (NASDAQ: FIGR) has sparked debate among investors. While the stock's current price of $40.30 suggests a modest 1.74% upside potential under BofA's scenario, this cautious stance contrasts with more bullish assessments from firms like Goldman Sachs and Sanford C. Bernstein, which have set targets as high as $54. To evaluate the validity of BofA's rating, it is essential to dissect the company's financial performance, competitive positioning, and the broader tech sector dynamics shaping its outlook.

Figure's Strategic Position and Recent Performance

Figure Technology Solutions, a blockchain-based fintech platform, has emerged as a disruptor in consumer lending and digital asset management. Its proprietary Provenance Blockchain technology slashed home equity loan processing times from 42 days to 10, a critical differentiator in a market dominated by legacy systems, according to a MarketBeat alert. The company's financial turnaround is equally compelling: it reported $191 million in revenue for the first half of 2025 and a net profit of $29 million, reversing a $13 million loss in the same period in 2024, according to a PYMNTS report. These metrics underscore its operational scalability and alignment with the growing trend of tokenizing real-world assets (RWAs), a niche where Figure holds a first-mover advantage.

The company's successful IPO in September 2025, which raised $787.5 million at $25 per share, further validated institutional confidence. Shares closed at $31.11 on the first day, a 24% pop, signaling strong retail and institutional demand, as noted in a Forbes analysis. This momentum, however, has not been without skepticism. Critics argue that Figure's $4.13 billion valuation target is sensitive to macroeconomic shifts, particularly interest rate volatility and regulatory scrutiny in the blockchain sector, according to MEXC price predictions.

BofA's Cautious Rationale: Valuation, Risks, and Sector Volatility

BofA's "neutral" rating reflects a measured approach to Figure's valuation and the broader tech sector's uncertainties. The firm's $41 price target implies a 1.74% upside from the current price, significantly lower than the $46.69 consensus target across eight analysts reported by MarketBeat. This discrepancy suggests BofA may be discounting aggressive growth assumptions embedded in other analysts' models.

One key concern for BofA appears to be valuation sensitivity. While Figure's revenue growth and profitability are impressive, its price-to-sales (P/S) ratio of 21.7x (based on $191 million H1 2025 revenue) exceeds industry averages for fintech peers. BofA's analysts may be factoring in a potential correction if macroeconomic conditions, such as rising interest rates or a slowdown in digital asset adoption, dampen investor sentiment, as discussed in a WallStreetPit piece. Additionally, the firm's internal research highlights the tech sector's exposure to overhyped AI expectations, a risk that could spill over into blockchain-driven fintechs like Figure, according to a CNBC list.

Competitive risks also loom large. While Figure's blockchain technology is a differentiator, the fintech landscape is crowded with incumbents and startups vying for market share. BofA's analysts may be wary of Figure's ability to defend its niche against larger players with deeper balance sheets, such as traditional banks expanding into digital lending or tech giants leveraging AI for financial services, a point raised in a Cobalt Intelligence newsletter.

Broader Sector Trends and BofA's Tech Outlook

BofA's broader 2025 tech sector analysis provides context for its cautious stance. The firm has identified three secular themes-Agentic AI, enterprise IT budget expansion, and cloud migration-as key drivers of growth. However, it cautions that these trends are still maturing, with Agentic AI's potential to automate roles in contact centers and software engineering not expected to fully materialize until the second half of 2025, per a GlobeNewswire release. For Figure, which operates in a distinct blockchain niche, the relevance of these trends is indirect, though its focus on AI-driven automation in loan processing aligns with broader efficiency goals, as noted in a Catenaa report.

BofA's own strategic investments in AI and digital transformation-such as its $4 billion 2025 tech budget and the internal AI assistant "Erica for Employees"-highlight its belief in technology's long-term value. Yet, its neutral rating on Figure suggests a preference for companies with more established business models or clearer paths to profitability in a volatile environment. The PYMNTS report above also details BofA's tech spending plans.

Conclusion: A Cautious Bet in a High-Growth Sector

BofA's "neutral" rating on Figure Technology Solutions is a reflection of both the company's strengths and the inherent risks of investing in a high-growth, niche sector. While Figure's blockchain innovation and financial turnaround are compelling, the firm's valuation and exposure to macroeconomic and regulatory uncertainties justify a measured approach. For investors, the divergence between BofA's $41 target and the $46.69 consensus highlights the importance of risk tolerance and time horizon. In a sector where volatility is the norm, Figure's potential to disrupt traditional finance remains intact-but so do the challenges of scaling in a competitive and unpredictable landscape.