By Sam Boughedda
Upstart Holdings (NASDAQ:UPST) shares are up more than 5% premarket Wednesday on the back of its latest earnings release, which saw it top analyst consensus expectations.
The consumer lending firm posted an adjusted loss per share of $0.25, $0.22 better than the analyst estimate of a $0.47 loss per share. Revenue for the quarter came in at $147 million versus the consensus estimate of $134.31M.
Although coming in better than expected, revenue declined 52% compared to the previous year's period. Total fee revenue was $156M, representing a 46% year-over-year decline.
Looking ahead, the company sees first-quarter 2023 revenue of $100M, below the consensus of $158M.
The report resulted in a mixed reaction from analysts, with Citi analysts downgrading Upstart to Sell from Neutral, cutting the firm's price target on the stock to $11 from $17 per share.
They said they had concerns for a more challenging outlook going into the results, but they were still surprised by the company's indications.
"Combined with challenged visibility, we find it difficult to justify current valuation levels. The stock has considerable upside should non-prime lending supply conditions improve, yet we think it will be several quarters (and a lower stock price) before a pathway becomes more evident," the analysts wrote.
On the other hand, Loop Capital upgraded Upstart to Buy from Hold with a $24 price target. Analysts there stated that the stock has reached a level they believe provides relative outperformance to their $24 price target.
"The company reported difficult numbers for its Q4 last night (volume down 63%) and an ugly guide for Q1 (volume estimated to be down 70%). However, we think the odds are that the TTM ending Q2:23 will be end of the worst of times, not the beginning," said the analysts. "We believe UPST is closer to the very end of a difficult period for participants on both sides of its platform."