Can Upstart (NASDAQ:UPST) be a “sell” even while the company exceeds Wall Street’s expectations? That’s the billion-dollar question that UPST stock traders are answering today. So far, they’re still quite bullish on Upstart.
Artificial intelligence (AI) lending marketplace Upstart released its fourth-quarter 2022 results yesterday. In the report, co-founder and CEO Dave Girouard acknowledged the “economic headwinds of 2022 and continued funding challenges.” Indeed, these issues were certainly reflected in Upstart’s Q4 data.
To be specific, Upstart revenue dropped 52% year-over-year (YOY) to $147 million. Furthermore, the company swung from GAAP net income of $58.9 million in the year-earlier quarter to a $55.3 million net loss in Q4 2022.
On the other hand, Upstart’s adjusted loss per share of 25 cents beat the consensus analyst estimate of a 47 cent loss per share. Plus, Upstart’s revenue beat Wall Street’s forecast of $134.31 million. So, while Upstart’s results might not have been ideal, at least they were better than expected.
UPST Stock Soars Despite Downgrade
That’s not the only important news item, however. Reportedly, Citi analyst Peter Christiansen downgraded UPST stock from “neutral” to “sell.” Along with that, the analyst reduced his price target on UPST stock from $17 to $11.
This is a huge price target cut, so Christiansen is clearly concerned about Upstart’s ability to deliver value to the shareholders. “Combined with challenged visibility, we find it difficult to justify current valuation levels,” the Citi analyst explained.
Granted, Christiansen isn’t entirely dour in his outlook for UPST stock. He predicted that shares have “considerable upside should non-prime lending supply conditions improve.”
On the other hand, the analyst anticipates that “it will be several quarters (and a lower stock price) before a pathway becomes more evident.” Hence, Christiansen seems to expect the situation to get worse before it gets better.
Financial traders aren’t overly worried about Upstart today, however. Shares are up more than 25% as of this writing, so Christiansen’s commentary isn’t currently pouring cold water on the rally in UPST stock.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
