Upstart (UPST) Jumps After Beating Q1 Estimates and Smashing Guidance Views, Long Runway of Growth Ahead Says Analyst

May 12, 2021 9:59 AM EDT
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Price: $125.51 +0.01%

Rating Summary:
    4 Buy, 3 Hold, 0 Sell

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    Up: 9 | Down: 9 | New: 39
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Shares of Upstart Holdings (NASDAQ: UPST) soared 17% in early trading Wednesday after the company delivered another beat-and-raise quarter.

Adjusted earnings per share were reported at $0.22 per share to easily top the $0.15 expected from analysts polled by Thomson Reuters. Sales for the quarter came in at $121.3 million to mark a 90% year-over-year increase and higher than the Street’s $116.06 million consensus.

“Upstart is delivering a combination of growth and profits that is rare in FinTech and in the technology industry overall,” said Dave Girouard, CEO of Upstart.

“The advantages of AI in lending are becoming more apparent by the day and Upstart is synonymous with this newly emerging category.”

For the ongoing quarter, Upstart expects to record business revenues between $150 million and $160 million to smash the average of $117.13 million expected from the surveyed market analysts. On a full-year basis, UPST has also lifted its guidance to $600 million in sales from the prior $500 million. Analysts were calling for $503.18 million.

Another beat-and-raise signals there is more upside room for UPST, writes JMP analyst Ronald Josey in a note today. The analyst hiked the price target to $149.00 per share from $111.00 per share on the Market Outperform-rated stock.

“With conversion rates expanding 480bps Q/Q to 22% and management raising 2021 revenue guidance by 20% following revenue and EBITDA coming in 3% and 37% above the high-end of guidance, Upstart’s marketplace is clearly gaining traction among users and its bank partners,” he says.

Similarly, John Hecht from Jefferies hiked the price target to $101.00 per share from $81.00 on the stock he rates as “Buy.”

“Guidance was especially strong - we note 2Q21 revenue guidance represents ~30% upside from our prior ests. at the midpoint. We continue to believe Upstart's cloud-based, Artificial Intelligence (AI) lending platform results in a superior credit product with attractive economics for both consumers and lenders, a 'win-win' model for both participants. We see LT, strong growth opportunities given a first-mover advantage and a very large TAM,” he commented in a note.

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