4 Analyst Takeaways From Upstart's Earnings Call Following 2Q Results

Zinger Key Points
  • Upstart’s Earnings Call highlighted third change on balance sheet usage, one analyst noted.
  • There's limited revenue visibility and more balance sheet risk, another analyst added.

Upstart Holdings Inc UPST reported total revenue of $228 million for the second quarter, up 18% year-on-year. The company’s results were broadly in-line with its preannouncement in July.

Piper Sandler On Upstart Holdings

Analyst Arvind Ramnani maintained a Neutral rating, while lowering the price target from $25 to $24.

The company’s third-quarter revenue projection was below consensus, and it withdrew its full-year guidance, Ramnani said in a note. “UPST’s contribution margin target for 3Q is 59% vs. 47% in 2Q, with the company shifting focus on expenses with top-line decelerating (3Q will be the second quarter of -25% q/q growth),” the analyst added.

“UPST indicated that it may expand its balance sheet opportunistically, if funding remains challenged. This is the third change on balance-sheet usage,” he further mentioned.

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Morgan Stanley On Upstart Holdings

Analyst James Faucette reiterated an Underweight rating, while reducing the price target from $15.50 to $15.00.

“We see UPST’s move to secure more predictable funding sources (including using its own balance sheet) as a reasonable path that we expect will ultimately lead to a more predictable (albeit slower growing) but reasonably profitable business – but with a lower valuation,” Faucette said in a note.

Check out other analyst stock ratings.

Stephens On Upstart Holdings

Analyst Vincent Caintic maintained an Underweight rating, while cutting the price target from $28 to $23.

“We don't find 3Q22 revenue guidance credible ($170m, down 25% q/ q) since mgmt was not willing to provide July trends nor the cadence of monthly revenues assumed,” Caintic wrote in a note. “We're more concerned following Upstart's 3Q22 guidance (Upstart pulled full-year 2022 guide) and re-decision to become a balance sheet lender,” he added.

JMP Securities On Upstart Holdings

Analyst Andrew Boone reiterated a Market Perform rating for the company.

Boone said in a note that the company “continues to see headwinds across its business from constrained funding.”

“With limited revenue visibility and as Upstart is now taking on more balance sheet risk to meet demand, we believe the risk/reward in shares is balanced,” the analyst wrote. “To be clear, we believe the company continues to have significant runway ahead as it addresses more credit products; however, we await greater stability in its core business before we become more positive,” he added.

UPST Price Action: Shares of Upstart Holdings had declined by 11.57% to $28.54 at the time of publication Tuesday.

Photo: Courtesy of upstart.com

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading IdeasAndrew BooneArvind RamnaniJames FaucetteJMP SecuritiesMorgan StanleyPiper SandlerStephensVincent Caintic
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