Lending stocks down after JPMorgan downgrades fintech players

Investing.com -- Shares of several fintech lenders fell on Monday after JPMorgan downgraded and revised target price of stocks in the sector, citing concerns over valuations, even as it forecasted a more favourable lending environment in 2025 driven by lower interest rates and improved funding conditions.

Upstart (NASDAQ: UPST) Holdings dropped 11% after JPMorgan cut its rating to "underweight" from "neutral." The brokerage raised its price target on the AI-powered lending platform to $57 from $45, which is a 28% downside from the stock's last close.

JPMorgan said while loan funding is expected to improve next year, Upstart’s current valuation, trading at nine times forward sales, already reflects those prospects.

Upstart shares have gained more than 90% so far this year. However, JPMorgan noted that the company was handling roughly $13 billion in annualized transaction volume the last time its stock traded above $70, eight times its current run rate.

LendingClub (NYSE: LC), down more than 6% on Monday, also downgraded, with JPMorgan lowering its rating to "neutral" from "overweight" in favor of faster-growing peers.

In contrast, Affirm Holdings (NASDAQ: AFRM) saw its shares were up 1% after JPMorgan raised its price target to $74 from $56, a 6% upside.

The brokerage highlighted Affirm's revenue and transaction volume growth, which have exceeded pre-pandemic levels despite broader challenges in e-commerce. JPMorgan also highlighted Affirm’s improving profitability and strong credit performance.

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