Meetings with Upstart Holdings Inc’s (NASDAQ:UPST) top management suggests that the company is focusing on near-prime personal loans, AI-led product development and underwriting, according to Needham.
The Upstart Holdings Analyst: Analyst Kyle Peterson reaffirmed a Buy rating and price target of $37.
The Upstart Holdings Thesis: The company’s current focus “is the right tonic to get the stock back on track,” Peterson said in the note.
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Upstart Holdings has set an ambitious target of generating revenues at a 35% CAGR (compounded annual growth rate) from fiscal 2025 through 2028, the analyst stated. The company could “lean heavily” into areas where its AI-based underwriting model excels, such as near-prime personal loans, he added.
Upstart Holdings is likely to try and supplement core personal loan growth with growth in other asset classes that align with its customer base, Peterson noted. “The newly announced Cash Line product is the most logical step in our view and UPST’s answer to earned wage access products that many neobanks are having strong success with of late,” he wrote.
Other areas that the company may target include HELOCs (home equity lines of credit) and auto loans, the analyst stated. “While these products are relatively small today, we believe the underwriting models are fine-tuned and that growth can be unleashed quickly as funding falls into place,’ he further wrote.
Margin Saga: The recent stock performance has been range-bound, after Upstart Holdings’ 2026 EBITDA margin outlook reflected a contraction of 100 basis points (bps), Peterson said.
While stating that 2026 could be a transition year for margins, the analyst added that Upstart Holdings’ new investment strategy and further AI improvements could bring “quick pay-back periods” and allow the company to reach or exceed its medium-term financial targets.
UPST Price Action: Shares of Upstart Holdings had risen by 9.20% to $33.30 at the time of publication on Monday.
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