Upstart Holdings' Future Growth Potential Emphasized Despite Near-Term Funding Challenges: Analyst

Needham analyst Kyle Peterson initiated coverage on Upstart Holdings Inc UPST with a Hold rating.

The analyst sees significant long-term growth potential for UPST but has been pressured by a more difficult funding environment.

Peterson thinks UPST has significant room to add partners across all channels and should continue to leverage its AI platform to boost robust growth. 

The analyst expects the company to add new bank/credit union partners and expand committed capital partnerships to drive healthy growth in FY24 and beyond.

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However, the analyst expects revenue to decline ~37% in FY23 on projected challenged funding for consumer credit, weighing on the near-term growth outlook.

Also, the analyst expects the company to witness a near-term headwind on valuation due to the higher level of loans.

Peterson estimates revenue of $530.0 million in FY23 and $720.3 million in FY24.

Last month, the company reported second-quarter revenue of $136 million (-40% Y/Y) and issued weak guidance.

Price Action: UPST shares are trading higher by 1.26% at $26.89 on the last check Monday.