Why BofA Upgrades Lending Platform Upstart Holdings After Q4 Report

Upstart Holdings Inc UPST was able to beat fourth-quarter expectations despite industry headwinds, according to BofA Securities.

The Upstart Holdings Analyst: Nat Schindler upgraded the rating for Upstart Holdings from Underperform to Buy, while keeping the price target unchanged at $255.

The Upstart Holdings Thesis: The company seems to have a long runway for growth in both personal and auto loans, Schindler said in the upgrade note.

Upstart Holdings reported its fourth-quarter results significantly ahead of expectations, with its revenue beat bring driven by higher-than-expected free revenue. Management guided to fiscal 2022 revenues higher than the Street projections.

“Despite upside to Street projections, we think forward guidance could be conservative given Upstart has now successfully delivered 4Q’21 far above expectations (biggest hurdle last quarter was on 4Q expectations vs. guide),” the analyst wrote.

“We are encouraged by Upstart’s superior profitability and strong projected growth throughout 2022 but note the increasing risk tolerance with higher default rates (expected) are potential risks if Upstart cannot adequately account for the different risk profile going forward,” he added.

UPST Price Action: Shares of Upstart Holdings had risen by 2.84% to $152.21 at the time of publication Thursday.

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