Key Takeaways
- B. Riley cut its Upstart price target to $42 from $54 on Nov. 4 but kept its Buy rating, and the new target still points to 83% upside.
- Upstart’s third quarter beat B. Riley’s forecasts, but the company cut its 2026 revenue and adjusted EBITDA outlook because rising defaults lowered the value of the loans it holds.
- The $42 target is about 14x the earnings analysts expect over the next 12 months, which is the stock’s average multiple over the past year.
- The multiple is reasonable, but the 2027 earnings estimate it rests on looks likely to fall while defaults keep rising.
Upstart Holdings (UPST) has lost 51% over the past 12 months. On Nov. 4, B. Riley cut its price target to $42 from $54, kept its Buy rating, and still sees 83% upside.
Upstart cut its outlook as defaults rose
The Upstart Macro Index (UMI), the company’s read on how much the economy raises default risk, has climbed from 1.39 at the end of 2025 to 1.53 in its latest reading. CEO Paul Gu pointed to inflation, which “reaccelerated to 3.7% with prices rising twice as fast as wages over the past quarter.”
On Nov. 3, Upstart cut its 2026 outlook to about $1.35 billion of total revenue and $260 million of adjusted EBITDA, from the $1.4 billion and $294 million it guided to in February. Analysts had expected $1.42 billion of revenue.
Gu still expects fee revenue and contribution profit to beat the original plan. The cut comes from the loans and loss-sharing stakes Upstart holds, which lose value as expected defaults rise. On the third-quarter call, Gu said that impact “is actually larger than the impact from reducing new originations.” And October’s daily originations fell 9% from September’s.
TIKR tracks 16 analysts on Upstart. How many say “Buy”?
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B. Riley’s path to $42
The quarter beat B. Riley’s forecasts: it had expected $360 million of revenue and $78.4 million of adjusted EBITDA, and Upstart reported $371 million and $89.3 million. Contribution profit hit a record $218 million, up 48% from a year earlier.
From there, the math is simple. Analysts expect $3.04 of normalized EPS over the next 12 months, so $42 is about 14x that, Upstart’s average forward P/E over the past year. Before the report, it traded at 7.0x.
Does $42 add up?
Sixteen analysts cover Upstart, and their average target has roughly halved over the past year, to $38 from $75:
Of the targets cut after the report, only Citi’s $46 sits above B. Riley’s.
Going into the report, analysts expected normalized EPS of $2.29 this year, $3.58 in 2027 and $4.68 in 2028:
After the report, BofA put 2027 at $2.79 and set its $28 target at 10x that. And the normalized figure is the generous one: the GAAP EPS estimate for 2027 is $1.88.
Each rise in UMI hurts Upstart twice
By Gu’s rule of thumb, each 1-point rise in UMI cuts daily originations by roughly 1% to 2%, and the hit to the loans Upstart holds is bigger still.
Here’s where I land: Upstart held a 14x multiple on average this past year, so B. Riley isn’t asking much there. I’m less sure about the $3.04 that multiple is applied to. While UMI keeps climbing, I’d expect the 2027 estimate to drift toward BofA’s, and 14x of a smaller number is a smaller target.
The next read comes in early December, with November’s originations and UMI. A reading back toward 1.4 would make $42 look a lot more reasonable, and so would Upstart Bank opening on time in early 2027.
So what is Upstart stock actually worth?
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