Shares of the AI-based lending platform Upstart Holdings (UPST) have gone through the roof and appreciated over 717% year-to-date. Its solid financial performance and a large growing market have pushed its stock price to new highs.
While Upstart stock has gained quite a lot, investors’ optimism remains elevated. TipRanks’ Stock Investors tool indicates that investors who hold portfolios on TipRanks maintain a Very Positive outlook on Upstart stock, with 14.1% of these investors increasing their exposure in the past month.
Investors’ optimism reflects the continued strength in Upstart’s business. Interestingly, its transaction volumes and conversion rates have improved both on a year-over-year and sequential basis in the last four consecutive quarters.
Further, its expansion into the large auto refinancing market has been a key enabler of its growth. Upstart expanded its auto refinance business to 47 states, covering over 95% of the U.S. population. Moreover, its increased dealership footprint and growing partnerships with banks for auto lending bode well for growth.
While Upstart is growing fast, management expects its contribution margin to trend lower in the next few quarters due to the increased investment in marketing and operations.
Meanwhile, following the massive share price gain, Peter Christiansen of Citigroup downgraded Upstart stock to Hold. However, Christiansen expects Upstart to benefit from loan growth and successful expansion within the auto lending market. Christiansen’s price target of $350 reflects a 5.1% upside potential.
Overall, Upstart sports an analyst rating consensus of Strong Buy, based on 6 Buys and 1 Hold. Also, Upstart scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating it has strong potential to outperform market expectations.
Having said that, given the significant growth in its stock, the average Upstart Holdings price target of $261.29 implies 21.6% downside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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