UpStart Holdings (UPST) operates a cloud-based, artificial intelligence (AI) lending platform that uses alternative data to measure credit risk and originate loans. The company is one of the fastest-growing stocks in the market with 234% revenue growth in its last earnings report.
It’s also one of the most volatile stocks in the market. Since its IPO in December of last year, UPST is 550% higher. However, the stock is also down 60% from its early October highs. One factor in its weakness was the company’s guidance for Q4 which came in below expectations. Another is that growth stocks have been selling off with rising short-term rates.
UPST’s growth rate and volatility make it one of the most widely-followed stocks on social media. The next major catalyst for the stock is its next earnings report in January, although the stock could continue to see selling pressure if rates continue rising into next week’s FOMC meeting.
For Q4, analysts are forecasting $0.52 per share in earnings which would be a slight deceleration from last quarter’s $0.60 per share. Revenue is forecast to come in at $262 million, a 14% increase from last quarter and a 202% increase from last year. Over the last 30 days, UPST’s consensus EPS forecast for Q4 was increased from $0.21 to $0.52 per share.
Here is a quick roundup of what Wall Street analysts have been saying about UPST since its last earnings report:
James Faucette of Morgan Stanley initiated coverage on UPST with a $200 price target and an equal-weight rating, saying that future growth had been priced into the stock.
Faucette acknowledged that UPST had been successful in getting partners to absorb credit risk due to the strong performance of its originations. He sees future growth contingent on the company’s ability to continue secure funding.
John Hecht of Jefferies maintained a Hold rating on UPST with a price target of $300. His forecast for Q4 EPS is below consensus at $0.37 per share.
Hecht noted that the stock price already reflects many of its positives including market penetration in personal and auto loans, when he downgraded it a Hold in early November which turned out to be a good call.
Peter Christiansen of Citi upgraded UPST to a Buy from Neutral and placed a $350 price target on the stock. Previously, he had downgraded the stock to a Hold from a Buy in September which turned out to be good timing.
Now, Christiansen is seeing weakness in UPST as a Buy opportunity. Notably, his last upgrade of the stock to a Buy in August also turned out well as it gained more than 100% over the next couple of months.
Andrew Boone of JMP Securities maintained a Buy rating on Upstart Holdings today and placed a $315 price target on the stock. In September, he maintained a Buy rating on the stock and raised his price target.
He also was optimistic after Q3 earnings, saying that the “key takeaway from the quarter was that Upstart provided a timetable for its new loan products as small dollar and commercial loans are expected to go live in 2022 while Upstart’s investment in a mortgage product will become more significant next year.”
The POWR Ratings is our quantitative tool to analyze stocks. It takes into account 118 different factors to rate stocks and also further evaluates them by different component grades. A and B-rated stocks have posted average annual performances of 30.7% and 19.7% which handily outperforms the S&P 500’s average 7.1% gain.
UPST is currently rated a C which translates to a Neutral grade. In terms of component grades, UPST has a B for Growth and a B for Quality. This is consistent with its triple-digit revenue growth and success in using AI to originate loans with lower default rates. Click here to see UPST’s complete POWR Ratings.
Overall, 5 out of 8 analysts covering the stock have a Buy rating on it with an average price target of $287 which implies about 78% upside.
The stock also has a wide range of price targets with the lowest at $200 and highest at $350. This is to be expected given the stock’s valuation, volatility, and growth rate.
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UPST shares closed at $160.75 on Friday, down $-18.85 (-10.50%). Year-to-date, UPST has gained 294.48%, versus a 27.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...
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