In a report released today, Reginald Smith from J.P. Morgan upgraded Upstart Holdings (UPST – Research Report) to a Hold, with a price target of $79.00.
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Reginald Smith’s rating is based on several factors that collectively suggest a cautious optimism towards Upstart Holdings. The company has demonstrated significant improvement in origination volumes and adjusted EBITDA margins, largely attributed to enhancements in their underwriting model and favorable macroeconomic conditions. These improvements have resulted in a notable increase in conversion rates and transaction volumes, offering potential for operating leverage.
However, despite these positive developments, there are underlying risks associated with the company’s co-investment and loss-sharing agreements, which could potentially impact their financial stability if model improvements do not perform as expected. Additionally, while the company has shown robust financial guidance for 2025, with expected revenue and EBITDA figures exceeding previous estimates, Smith remains cautious due to the need for a stable macro environment and continued funding availability. As such, the Hold rating reflects a balance between recognizing the company’s promising trajectory and the potential risks that could affect its future performance.