Sign InUPST Faces Challenges with Weak Financials and Mixed Indicators; 'Hold' Recommendation
Summary
The technical analysis of Upstart Holdings, Inc. indicates some volatility and mixed signals, while the fundamental analysis suggests trouble and a potential fall in the stock's value; therefore, a 'Hold' status is recommended for UPST as of November 07, 2023.
Technical Analysis
Upstart Holdings, Inc. (Ticker: UPST) closed at $29.41 as of November 07, 2023. The day's range circumscribed a low of $28.79 to a high of $30.20, indicating some volatility. The Relative Strength Index (RSI14) stands at 60, suggesting the stock is nearing an overbought condition. The 50-day moving average at $28.11 shows an upward trend, which is also validated by the 200-day moving average standing at $27.53.
The MACD (3-month) of -1.27 suggests some bearish momentum, which may deter potential investors. The Average True Range (ATR) is 6.63, indicating significant market volatility. These mixed signals render the technical analysis of UPST somewhat puzzling.
Fundamental Analysis
Upstart Holdings, Inc.’s market capitalization stands at $1.80 billion, with 83.89 million shares outstanding. The rather low EPS of $-3.25 and negative price-to-earnings (PE) ratio of -6.59 reflect a troubled financial situation, potentially indicating loss generation.
The weaker-than-expected Q3 revenue and the predictions for Q4 leave a lot to be desired, suggestive of UXST navigating a rough patch. High-interest rates seem to be affecting the company's growth, with borrowers eschewing high-interest loans. Despite the dismal Q3 results and unappealing Q4 forecasts, BTIG analyst Lance Jessurun continues to advocate a 'Buy' recommendation on the stock.
In contrast, market analysts provide a consensus recommendation of 'Hold,' derived from 7 'Hold,' 3 'Buy,' and 2 'Sell' advisories from analysts. The price targets range from $10 to $180 with a median target of $20.5. This inconsistency underscores the current uncertainty surrounding the stock.
The reduced discounted cash flow (DCF) value of $26.51 compared to the last close price suggests an overvalued standing, which might contribute to some skepticism.
Conclusion
Given the lackluster Q3 results, bleak Q4 revenue forecasts, and the overvaluation suggested by the DCF, the subject stock yields some concerns. The economic interest-rate environment further adds to the challenges facing the company. While the technical analysis indicates a slight uptrend, the MACD's bearish momentum mounted by the fundamental analysis steers it towards a potential fall.
Therefore, the mediocre financials, combined with the negative news sentiment and the mixed technical indicators, suggest a 'Hold' status for UPST. However, considering the discrepancy in analysts' opinions, potential investors must tread cautiously and consider possible market risks and impending news. Applied discernment and adequate risk-management strategies could pave the way for benefits from any potential price movements in the future.
