Upstart Holdings Inc (NASDAQ:UPST) saw its stock decline by 6% in pre-market trading Monday after Goldman Sachs analyst Will Nance initiated coverage on the company, assigning a Sell rating and setting a price target of $71.
This target suggests a potential 10% drop from the stock’s closing price of $75.62 on Friday. Nance’s Sell rating aligns with the previous assessment by analyst Mike Ng.
In his analysis, Nance described Upstart as a “top marketplace lender” equipped with advanced machine learning models that provide superior risk pricing compared to competitors in the marketplace lending sector. However, he noted that the company did not demonstrate significant outperformance during the recent period of consumer credit weakness.
While recognizing Upstart’s ability to avoid adverse selection in marketplace lending, Nance raised concerns about the firm’s limited advancement in establishing long-term consumer relationships. He also pointed out the online personal loan market’s competitive nature and its dependence on cyclical third-party funding.
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