- UPST stock is down 10.7% to $32 in Wednesday's premarket.
- Morgan Stanley downgraded UPST to Underweight.
- Analyst James Faucette sees Upstart having trouble growing amid higher interest rates.
Upstart Holdings (UPST) stock has lost more than 10% in Wednesday's premarket after a downgrade by Morgan Stanley. The investment bank's analyst James Faucette says with interest rates expected to rise even more in the second half of the year, Upstart may receive less demand for its often high-priced loans. UPST shares traded down 10.7% to $32 in the premarket.
Upstart stock news
Morgan Stanley's James Faucette sees Upstart in a bad position ahead of a higher interest rate environment. "Deteriorating relative underwriting performance and increasing required returns from institutional partners have shifted our view incrementally negative, and we see downside risk to estimates and valuation as the platform's cyclicality is tested," Faucette said in his investor note. Faucette changed UPST's rating to Underweight from Equalweight.
This comes just a few days after Wedbush put out a note concerning worries over Upstart's delinquency rates. Analyst David Chiaverini said that Upstart's asset-backed securities that are traded on Wall Street could possibly meet the criteria for early amortization triggers in July. Hitting these triggers would mean that Upstart's delinquencies were worse than expected from rating firm Kroll and may mean that Upstart will need to offer lower prices on its ABS portfolio in the future.
"A lower than average rollover rate may prevent the triggers from being tripped in the near month. Nonetheless, we are surprised at this level of deterioration given UPST's loan modification policy change occurred in April 2022," Chiaverini wrote.
Upstart stock forecast
Nothing about the Upstart stock daily chart below looks good. Well, at east the Moving Average Convergence Divergence (MACD) is trending higher. UPST stock price is trending below the 9-day moving average though, and its recent range high on June 24 came in below the earlier range highs from early June and late May. Shares of the AI lender that has developed its own non-FICO credit score are not popular on the Street.
The most likely move would be UPST stock trending down to support at $26. UPST is not neutral until above $55 and not bullish until $72.50.
UPST 1-day chart
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