On Monday, JPMorgan (NYSE:JPM) issued a new rating for Upstart Holdings Inc (NASDAQ:UPST), downgrading the stock from Neutral to Underweight, despite raising the price target to $57 from $45. The adjustment in the stock's outlook comes amid expectations for changes in the third-party funding environment.
According to JPMorgan, while the funding climate is anticipated to improve by 2025, the current stock valuation already reflects this optimism. Upstart's shares are trading at nine times forward sales, which the firm considers steep given the context of historical performance and future prospects.
The firm noted that Upstart previously managed approximately $13 billion in annualized origination volume, which is significantly higher than its current rate. This level of activity was last seen when Upstart's stock was trading at higher prices, in the high $70 range.
JPMorgan's revised price target of $57 represents an increase from the previous target of $45, suggesting a level of confidence in the company's potential value. However, the downgrade to Underweight indicates a cautious stance on the stock's current valuation relative to its earnings potential.
The assessment by JPMorgan suggests that investors may need to recalibrate their expectations for Upstart as the market environment evolves. The firm's analysis points to the need for a careful evaluation of Upstart's stock, considering both its past performance and the anticipated improvements in the funding landscape.
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