Analysts Just Trimmed Price Targets for These 5 Stocks

04. Upstart Holdings, Inc. (NASDAQ:UPST)

Price Reaction after the Price Target Cut: -0.75 (-2.69%)

Upstart Holdings, Inc. (NASDAQ:UPST) operates in the financial technology (FinTech) sector. It specializes in artificial intelligence and machine learning to provide lending and credit services. Upstart Holdings, Inc. (NASDAQ:UPST) utilizes technology to make more accurate lending decisions and streamline the loan approval. On September 21, B. Riley revised its price target for Upstart Holdings, Inc. (NASDAQ:UPST) shares from $49.00 down to $36.00, marking a notable reduction in their outlook for the stock’s potential value. Despite this adjustment, B. Riley has maintained its “Neutral” rating for Upstart Holdings, Inc. (NASDAQ:UPST), indicating a stance of neither strong endorsement nor discouragement for investors. At the time of the latest update, Upstart Holdings, Inc. (NASDAQ:UPST) stock is trading at $27.09, representing a 2.7% decline in response to B. Riley’s target price revision.

Here is what Vulcan Value Partners has to say about Upstart Holdings Inc. (NASDAQ:UPST) in its Q2 2022 investor letter:

“Upstart Holdings Inc. was a material detractor for the quarter. It was a mistake, and we sold our position. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models that are designed to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. When we purchased Upstart, we believed the company had an excellent product and the addressable market was large.

Upstart’s results during 2021 were impressive. In the first quarter of 2022, the company reported solid results but lowered guidance and, more importantly, used its balance sheet to warehouse loans temporarily. The company’s decision to use its balance sheet to finance its growth surprised us and other market participants, and its stock price decreased dramatically. While we admire the management team, we are less confident in the company’s long-term prospects.

It will be more difficult than we anticipated for Upstart to extend its competitive advantages with smaller banks into adjacent markets such as auto loans and mortgages. As a result, our value for Upstart is unstable and the company no longer qualifies for investment. We are following our discipline and reallocating capital into companies with more stable values.”