Upstart's stock rises as analyst says investors have been ignoring a key catalyst

By Hannah Pedone

A BTIG analyst sees 55% more upside for Upstart's stock, saying the fintech company's plan to obtain a banking charter could reduce its risky exposure to private credit

BTIG analyst Vincent Caintic upgraded shares of Upstart to buy from neutral.

Upstart Holdings' plan to become a bank is a big deal, even if the stock market hasn't given the company credit, according to an analyst.

BTIG analyst Vincent Caintic upgraded shares of Upstart (UPST) to buy from neutral on Monday, saying in a note that the company, which uses artificial intelligence to inform lending decisions, will face lower costs and reduced regulatory risks upon obtaining an official bank charter.

Shares of Upstart rose 5.4% on Monday. The company submitted its application to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. last Tuesday, but shares fell across the three-session stretch that followed.

Caintic said that a bank charter will mitigate the potential downsides for Upstart that stemmed from its exposure to private credit, which had been a key reason behind his previously held neutral rating. He said that having bank deposits will meaningfully reduce risk related to private-credit exposure.

He has a $43 price target on the financial-technology stock, which represents 55% upside from recent levels. Shares have lost about two-thirds of their value from their 52-week high above $84 achieved in July.

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Caintic also pointed out that the bank charter could generate significant cost savings for the company. He said the charter will allow the company to reduce transaction-volume costs, fees paid to its current partner banks and expenses related to having multiple licenses for different states. He expects Upstart to increase its adjusted operating earnings per share by 60% annually.

Annie Delgado, Upstart's chief risk officer and the proposed CEO of Upstart's forthcoming bank, said in the company's press release last week that engaging with financial regulators will be critical as more lenders seek to infuse artificial intelligence into their operations.

"AI-based lending is the future of credit," she said.

"If approved, we look forward to working directly with the OCC, FDIC and the [Federal Reserve] to set the standard for modern AI model deployment within the banking system," she added.

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While the company has not provided a timeline for approval, Caintic said he "wouldn't be surprised" if it happens by late 2026 or early next year, which could translate to improving expenses as early as 2027, he said.

-Hannah Pedone

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03-16-26 1657ET