Ken Shih, an analyst from DBS, maintained the Hold rating on Upstart Holdings (UPST – Research Report). The associated price target is $65.00.
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Ken Shih has given his Hold rating due to a combination of factors influencing Upstart Holdings’ stock. Despite the strong revenue growth of 56% year-over-year in the fourth quarter of 2024 and a significant improvement in adjusted EBITDA, Ken remains cautious. The company’s guidance for fiscal year 2025 forecasts a 57% revenue increase to USD1 billion, which surprised the market and led to a substantial post-market price jump. However, the macroeconomic uncertainty, particularly regarding credit risk, tempers the enthusiasm for a more aggressive stance.
Upstart Holdings’ AI-driven credit scoring system shows promise by enhancing loan origination capabilities, which should support business growth over the long term. The company is benefitting from improvements in its model’s prediction accuracy and the expansion of its loan scale. However, the softening tailwind from rate cuts and the potential for a higher-for-longer interest rate environment pose risks to the valuation and profitability of fintech players like Upstart. Therefore, the Hold rating is maintained, with a target price of USD65 based on a slightly conservative valuation multiple compared to historical averages.
Shih covers the Financial sector, focusing on stocks such as AIA Group, BlackRock, and Manulife Financial. According to TipRanks, Shih has an average return of 16.9% and a 67.00% success rate on recommended stocks.
In another report released yesterday, Barclays also maintained a Hold rating on the stock with a $80.00 price target.