By Nate Wolf

Upstart Holdings stock deserves a premium valuation because the artificial-intelligence lending platform is positioned to shake up the way banks make loans, Piper Sandler says.

Analyst Patrick Moley began covering the stock on Tuesday, rating it at Overweight with a target of $75 for the price. The stock was up 8.1% to $63.83 in early afternoon, while the tech-heavy Nasdaq Composite gained 1.6%.

Upstart uses AI models to automate loan origination and connect consumers to personal, automotive, and other loans from banks and credit unions. Approvals are instant in roughly 90% of cases. Those models should grow smarter and more effective with time, Moley said, making them attractive to banks looking to save costs.

"UPST's loan origination process is more efficient than traditional bank methods," Moley wrote. "The model runs 24/7 and requires significantly less labor for the banks than a traditional team of lenders."

The move toward AI underwriting, particularly for credit verification, is poised to continue, and Upstart has an early-mover advantage as the trend unfolds, Moley argued. The stock, Moley wrote, deserves a premium valuation given "the disruptive nature of the offering" within a large consumer lending market.

Upstart shareholders have been in for a roller-coaster ride since the company went public in 2020. Shares reached a record closing price of $390 in October 2021 before tumbling in 2022 as higher interest rates depressed loan volume. The company posted losses in the fiscal years ending in 2023 and 2024 after recording profits the previous three years.

But Upstart's stock has climbed 183% over the past 12 months as the company got " back in growth mode," as CEO Dave Girouard put it. On an earnings call last November, after the Federal Reserve began lowering interest rates in September, Girouard said rate cuts would also help the business.

Fintech peers SoFi Technologies and LendingClub have also rocketed higher in the past year.

Wall Street remains divided on Upstart, however. Of the 13 analysts polled by FactSet since May, four have a Buy rating or the equivalent, two rate the stock at Sell, and seven have it at Hold.

Write to Nate Wolf at nate.wolf@barrons.com

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June 24, 2025 13:45 ET (17:45 GMT)

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