Shares of Upstart Holdings Inc
The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release:
Morgan Stanley analyst James Faucette maintained an Underweight rating, while raising the price target from $10 to $13.
Piper Sandler analyst Arvind Ramnani reiterated a Neutral rating, while raising the price target from $16 to $17.
Wedbush analyst David Chiaverini reaffirmed an Underperform rating and price target of $10.
Stephens analyst Vincent Caintic reiterated an Underweight rating and price target of $6.
Morgan Stanley
"UPST's announced agreements with institutions to receive ~$2bn in capital dedicated to origination production over the next ~12 months provide stabilization and upside to the company's volume trajectory," Faucette wrote in a note.
Concerns remain around the macro environment, the company's "elevated operating expenses," and credit performance, he added.
Piper Sandler
"Upstart 1Q revenue and margins came in ahead of the Street, and 2Q targets are ahead of consensus wide expectations," Ramnani wrote in a note. However, the company did not provide any full-year guidance due to lack of visibility.
Upstart secured multiple funding agreements, which provides the company with "resilient capital supply for now." But there is lack of clarity around "the longer-term implications on the business model, margins etc," the analyst added.
Wedbush
"The biggest takeaway in the quarter is that Upstart has secured long-term funding agreements that could deliver $2 billion to the Upstart platform over the next 12 months," Chiaverini said.
While establishing these long-term funding partners is encouraging, it is unclear how much "preferential economics" UPST is giving up to these long-term committed partners, he added.
Stephens
"While the $2 billion of funding is a positive surprise, the "preferential" economics implies net take rate reduction, something which has been a bear case for awhile," Caintic wrote in a note.
"We didn't get many details on what preferential partners will receive, but we'll watch for margin erosion as this capital is utilized," he added.
