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Tuesday, Upstart Holdings Inc (NASDAQ:UPST) saw its stock rating upgraded by BofA Securities from Underperform to Neutral, with a maintained price target of $53.00. The adjustment comes as the analyst at BofA Securities, Nat Schindler, believes the risk-reward balance for the company has improved, following a significant drop in its share price. According to InvestingPro data, the stock has shown significant volatility, with a remarkable 108.77% gain over the past year despite a 21.88% decline year-to-date. [Get access to 10+ exclusive InvestingPro Tips for UPST and detailed volatility metrics with an InvestingPro subscription.]
Schindler noted that Upstart’s shares have declined by 45% since the company reported its fourth-quarter earnings in mid-February, a steeper drop than the 9% decline experienced by the S&P 500 during the same period. This decline brings Upstart’s valuation in line with BofA’s price objective, which is based on 4.5 times the projected 2026 revenues.
The analyst pointed out that while there is an ongoing risk of a pullback from funding partners due to macroeconomic uncertainties, this concern is mitigated by Upstart’s efforts in diversifying its product offerings and securing more long-term funding agreements. These strategic moves are seen as stabilizing factors for the fintech company’s future.
Additionally, forthcoming events such as the company’s first-quarter earnings report scheduled for May 6, and an AI Investor Day on May 14, are viewed as potential catalysts for the stock. These events could provide investors with greater insights into the company’s performance and strategic direction, potentially influencing the stock’s trajectory.
In conclusion, the upgrade to Neutral by BofA Securities reflects a more balanced view of Upstart’s current position in the market, considering both the challenges it faces and the opportunities that lie ahead. The maintained price target of $53.00 is indicative of BofA’s unchanged expectations for the company’s revenue multiples looking forward.
In other recent news, Upstart Holdings has reported several significant developments. The company has initiated an at-the-market equity offering program, allowing for the potential sale of common stock worth up to $500 million. This move, filed with the SEC, aims to raise capital for general corporate purposes, including working capital. Citi analyst Peter Christiansen has raised the price target for Upstart to $108, maintaining a Buy rating, citing the company’s 21% revenue beat for the fourth quarter of 2024 and a forecast of approximately 60% growth for the fiscal year 2025. BofA Securities also updated its outlook, raising the price target to $53 while retaining an Underperform rating due to concerns about the stock’s valuation.
Additionally, Upstart has expanded its reach by partnering with First Commonwealth (NYSE:FCF) Federal Credit Union to enhance personal loan availability in Pennsylvania and New Jersey. This collaboration is part of Upstart’s strategy to broaden affordable credit access through its AI lending platform. The company has also appointed Peter Bernard to its Board of Directors, bringing extensive experience in banking and risk management to support Upstart’s growth. These recent developments reflect Upstart’s ongoing efforts to strengthen its financial position and expand its market presence.
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