On Monday (NASDAQ:MNDY), Upstart Holdings Inc (NASDAQ: NASDAQ:UPST) received an updated stock rating from BTIG, shifting from Sell to Neutral. The adjustment comes as the analyst acknowledges a significant increase in the company's stock value, which has risen by 46%. Despite maintaining some reservations about Upstart, BTIG has opted to remove their previous target price of $14.
The decision to upgrade the rating is influenced by the positive performance of Upstart's loan volumes leading up to the third-quarter earnings report for 2024. The firm notes that while concerns about the company's operations persist, the likelihood of accelerated volume growth is a driving factor for the stock moving into 2025.
BTIG's revised stance is based on a scenario where Upstart experiences substantial revenue growth while maintaining current expense levels. This scenario, described as a bull-case, suggests that while the firm is not overtly bullish on Upstart, the potential for growth justifies the Neutral rating.
The analyst's comments highlight a cautious optimism, indicating that while they were hesitant to upgrade Upstart sooner, the current evidence points towards a more favorable outlook for the company's shares. The emphasis is on the expectation of further acceleration in volumes, which is considered the primary catalyst for Upstart's stock performance in the near future.
In summary, BTIG has shifted its perspective on Upstart Holdings Inc, taking into account the company's recent performance and potential for continued growth. The firm's neutral position reflects a balanced view of the company's prospects, considering both the positive developments and the remaining concerns.
In other recent news, Upstart Holdings reported a strong third quarter for 2024, demonstrating a substantial growth trajectory. The company witnessed a 43% sequential increase in lending volume and a significant rise in revenue, including a 28% increase in fee revenue to $168 million. The loan transactions grew by 64% year-over-year, reaching about 188,000.
The company's foray into the auto loan and home equity line of credit (HELOC) markets yielded promising results, with the HELOC business doubling and auto loan originations increasing by 46%. Upstart also announced a strategic partnership with Blue Owl, securing up to $2 billion in loan purchases over the next 18 months.
Despite these advancements, the company reported a GAAP net loss of $7 million for Q3. However, Upstart anticipates continued growth, projecting total Q4 revenues of approximately $180 million and an adjusted EBITDA of $5 million.
InvestingPro Insights
The recent upgrade of Upstart Holdings Inc (NASDAQ: UPST) by BTIG aligns with several key metrics and insights from InvestingPro. The stock's significant return over the last week, with a 71.46% price total return, and its strong performance over the last month (72.27% return) and three months (123.45% return) support BTIG's decision to revise their rating upward.
InvestingPro data shows that Upstart is trading near its 52-week high, with its current price at 98.48% of the 52-week high. This aligns with BTIG's observation of the stock's substantial increase. However, an InvestingPro Tip cautions that the RSI suggests the stock is in overbought territory, which investors should consider alongside the positive momentum.
Despite the stock's impressive performance, it's worth noting that Upstart is not currently profitable, with a negative P/E ratio of -37.53 for the last twelve months as of Q3 2024. This underscores BTIG's continued reservations about the company's operations. Nevertheless, the revenue growth of 10.89% over the same period and a quarterly revenue growth of 20.13% in Q3 2024 support the potential for accelerated volume growth that BTIG anticipates.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Upstart Holdings Inc, providing a deeper understanding of the company's financial health and market position.
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