BTIG analyst Vincent Caintic upgraded Upstart Holdings Inc (NASDAQ: UPST) from Neutral to Buy with a price target of $43.00.

The analyst comments "We upgrade UPST shares to Buy with a $43 target price. Our target is 6x 2027 EPS if our bank expense savings math is right (we explain the savings below), and 9x if our bank math is wrong. The market didn't react at all to Upstart's bank application announcement on Tuesday, March 10. This surprised us, since a bank charter addresses what we consider to be a key downside risk of Upstart's private credit exposure, and one of the main reasons we had been Neutral-rated. While there's no guarantee that Upstart will successfully become a bank, we think UPST's current share price is both 1) not pricing any potential upside from becoming a bank, and 2) pricing in significant liquidity risk of Upstart losing funding sources. We therefore take this opportunity to upgrade UPST shares to Buy. We calculate that Upstart's annual EPS could increase 60% by reducing transaction volume costs by 100bps. For example, on our 2026 transaction volume estimate of $19 billion, Upstart would save $190m of expenses, significant compared to Upstart's (pre-bank) 2026 EBITDA guidance of $294m. For 2025, Upstart quantified capital and regulatory infrastructure costs at $200m, 182bps of its $11 billion transaction volumes, which would be meaningfully reduced with a bank charter. Even without the savings, we would upgrade UPST to Buy on the bank downside protection alone, especially with UPST shares trading cheaply on fears of private credit appetite collapsing. We outline what a deposit-funded Upstart model would look like, later in this note. Following Upstart's announcement of its intent to hold a national bank charter and our follow-up call with the management team of Upstart, we are incrementally positive on UPST for three reasons: 1. Significant combined cost savings, which we peg at 100bps of transaction volumes, including the elimination of "tens of basis points" of fees currently being paid to partner banks, and operational costs of having hundreds of licenses across different states. 2. Downside protection in draconian scenarios where liquidity dries up for Upstart's current funding partners. 3. Expanding the customer base, with one consistent, unified regulatory framework across all 50 states. Since we do not yet know the timing of the Upstart bank close, we have not yet incorporated the 60% upside into our official published numbers. However, Figure 1 on page 3 shows what we think pro forma EPS will look like. We note that our existing estimates are already Street-high on 2027/2028 Operating EPS (+3%/+23% above consensus) and Street-high on total revenues for 2026/2027/2028 (+47% y/y/ +40% y/y/+24% y/y above consensus)."

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Shares of Upstart Holdings Inc closed at $26.36 yesterday.