By Senad Karaahmetovic
Shares of Upstart (NASDAQ:UPST) are down over 12% after the company provided investors with a soft Q3 revenue projection.
Upstart reported revenue of $228.2 million to miss on the $249.3 million consensus. Adjusted EPS came in at $0.01, again much lower than the analyst estimate of $0.08. Adjusted EBITDA fell 91% YoY to $5.51 million.
For this quarter, Upstart sees revenue of $170 million, a large miss compared to the $258.1 million consensus.
An analyst from BofA reiterated a Neutral rating and a $34 per share price target.
“Although UPST’s business model has shown tremendous growth in a benign credit environment, we are concerned about the company’s ability to perform in an environment of rising rates and defaults,” the analyst told clients in a note.
A Morgan Stanley analyst is even more bearish than his Bank of America colleague as he reiterated an Underweight rating and cut the price target to $15.
“We see UPST’s move to secure more predictable funding sources (including using its own balance sheet) as a reasonable path that we expect will ultimately lead to a more predictable (albeit slower growing) but reasonably profitable business – but with a lower valuation,” he wrote in a note.