An Analyst Sours On Upstart Stock But Says SoFi Tech Could Become ‘American Express’ Of Fintech
JP Morgan analyst Reginald L. Smith noted that 2024 was a tale of two halves for fintech stocks. After a lagging start to the year, the aggregate market cap of the analyst’s fintech coverage universe has increased more than $65 billion since mid-September, fueled by cheerful calendar third-quarter 2024 results and management commentary, two rate cuts, and the U.S. Presidential Election.
In fiscal 2025, lower benchmark rates and an improved third-party funding environment should spur increased loan origination volume and healthier gain-on-sale (GOS) margins for fintech lenders.
However, Smith remains cautious about fintech lenders at current levels and noted investors will find a more attractive entry point following the calendar fourth-quarter earnings cycle.
Also Read: CrowdStrike Sees Strong Module Adoption, Valuation Concerns Persist: Analysts
Smith downgraded Upstart Holdings Inc (NASDAQ:UPST) from Neutral to Underweight and raised the price target from $45 to $57.
Upstart Holdings benefits from a powerful flywheel effect that creates a virtuous cycle whereby more excellent repayment data leads to improved risk and fraud detection, which leads to higher approval rates and increased volume.
Smith noted the potential of Upstart Holdings’ AI lending platform, especially in light of an improving consumer credit and loan funding environment, and is encouraged by the company’s increasingly durable capital base, but continues to struggle with valuation and noted …
Full story available on Benzinga.com