Credit performance and interest rates, both tailwinds for Upstart Holdings Inc. UPST in 2021, have transformed into headwinds in 2022.
The Upstart Analyst: Morgan Stanley analyst James Faucette downgraded his rating for Upstart from Equal-Weight Underweight, while reducing the price target from $88 to $19.
The Upstart Thesis: Around 75% of the company’s platform volumes are derived from the institutional funding network. Rapid interest rate hikes and normalizing credit performance “have contributed to increased required returns from institutional investors, leading to higher APRs on UPST's platform — impairing borrower demand,” Faucette said.
“We expect these trends to continue in the medium-term, where as the market digests a rapid pace of interest rate hikes and incrementally challenging economic conditions, we think risks to estimates are skewed to the downside,” he added.
Faucette reduced the earnings estimates for the second, third and fourth quarters from 49 cents per share to 31 cents per share, from 52 cents per share to 36 cents per share and from 57 cents per share to 44 cents per share, respectively.
UPST Price Action: Upstart shares declined by 10.40% to $32.12 at the time of publication Wednesday.
Photo by Alex Proimos/Wikimedia.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.