Upstart Holdings Targets 15% EPS Growth Amid 45% YTD Slide
Upstart Holdings anticipates a 15.38% EPS increase despite a 45.46% year-to-date decline, with valuation models suggesting significant upside.
Key points
- Upstart Holdings expects a 15.38% year-over-year EPS increase in its upcoming earnings report.
- The stock is down 45.46% year-to-date but trades at $25, below a $40.13 fair value estimate.
- A DCF model values the company at $68.78 per share, highlighting a wide gap to the current price.
Upstart Holdings (UPST) is preparing for its next earnings report, where the company expects to deliver a 15.38% year-over-year increase in earnings per share. This projected growth stands in contrast to the stock’s recent performance, as the shares have fallen 45.46% year-to-date and dropped 63.18% over the past year.
The company recently closed at approximately $25 after a modest 1.01% gain, reflecting a short-term rebound following a 17.49% decline over the previous 30 days. Traders are now assessing whether this dip represents a discount or if the broader downward momentum will persist beyond the upcoming quarterly results.
Valuation models suggest significant upside
According to data cited by Yahoo Finance, a widely followed narrative anchors the fair value of Upstart at $40.13, implying a 38% undervaluation relative to the current market price. This thesis relies on the growth of the HELOC product, driven by improved conversion rates and state expansion, which is expected to enhance revenue and margins through cost-effective funding partnerships with banks.
A separate discounted cash flow analysis places the future cash flow value at $68.78 per share. This figure is significantly higher than the current trading level, suggesting that the market may not be fully pricing in the company’s projected cash generation, although the accuracy of these projections remains a point of contention among investors.
Credit risk remains a key concern
Despite the optimistic valuation metrics, the investment case faces headwinds from potential spikes in credit losses. If funding partners restrict loan flow or if default rates rise, the revenue growth assumptions underpinning the high fair value estimates could quickly unravel. The company’s reliance on external funding relationships introduces a level of operational risk that must be managed carefully.
Investors are currently weighing these risks against the potential for margin expansion. The divergence between the short-term price action and long-term valuation models creates a complex decision point, requiring a close examination of the underlying credit data and partner commitments in the upcoming earnings release.
