Why This Upstart Analyst Believes There Is More Pain Ahead

Although Upstart Holdings Inc. UPST stock has lost 95% from its peak share price, there is likely to be more pain in the coming quarters, according to Mizuho Securities.

The Upstart Holdings Analyst: Dan Dolev initiated coverage of Upstart Holdings with an Underperform rating and a price target of $17.

The Upstart Holdings Thesis: The company’s low-quality borrowers and rising delinquencies, due to high-interest rates and inflation, will likely continue to weigh on the supply of funds, Dolev said in the initiation note.

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“Our scenario analysis suggests that if funding remains challenged, UPST may need to use warehouse / own-balance sheet lending to breakeven, which may not be well-received by investors,” the analyst wrote.

“Assuming the macroeconomic environment will worsen over the coming 12-18 months, we believe it is unlikely that funding for UPST will reopen en masse anytime soon,” he added.

UPST Price Action: Shares of Upstart Holdings declined by 0.75% to $21.10 in premarket trading on Tuesday.