BTIG has reiterated a Neutral rating on Upstart Holdings Inc (NASDAQ:UPST) after observing improvements in the company’s credit performance in the fourth quarter of 2025. The research house noted that Upstart’s monthly credit readings improved in October and November 2025 and that trends in December were stable, supporting the view that transaction volumes could have accelerated quarter-over-quarter.
Valuation and recent performance
BTIG underlined that Upstart trades at a price-to-earnings ratio of 176.37, a level the research firm regards as well above market norms. InvestingPro data cited in the research indicates the stock is overvalued relative to Fair Value estimates. The company has nevertheless generated strong top-line momentum, with revenue increasing 64.93% over the last twelve months, even as the share price has fallen 45.78% in the prior six months.
Credit metrics and the Upstart Monthly Index
BTIG pointed to specific monthly signals when assessing credit trends. The Upstart Monthly Index returned to a 1.4-1.5 range in October and remained below 1.5 in November, after readings above 1.5 during the third quarter of 2025. According to BTIG, the Index staying within that 1.4-1.5 band and the improved credit metrics would have allowed the company to grow transaction volumes in the fourth quarter of 2025 versus the third quarter.
Market reaction and analyst activity
Following Upstart’s third-quarter results, which contained mixed elements and revenue that fell short of expectations, several analyst firms adjusted their price targets. Needham reduced its target to $56, Morgan Stanley cut its target to $45, and BofA Securities established a $71 price target. Those changes were driven by the company’s AI-driven underwriting adjustments - namely lower approval rates and higher pricing in response to uncertain economic conditions - which impacted conversion rates.
In parallel, Truist Securities initiated coverage on Upstart with a Buy rating and a $59 price target, citing the company’s AI-driven underwriting model. These divergent analyst actions reflect differing views on how the underwriting adjustments and macro environment will influence performance.
Institutional loan purchases
On the funding side, BTIG’s note referenced a material loan purchase commitment: Castlelake, L.P. has committed to purchasing up to $1.5 billion in consumer loans through Upstart’s AI lending platform. This represents the third commitment from Castlelake under the partnership, following earlier agreements totaling $4.0 billion and $1.2 billion. The new commitment underscores continued institutional interest in acquiring consumer loans originated through Upstart’s platform.
Implications
While BTIG retained a Neutral stance, the firm’s commentary balances improved credit readings and meaningful loan purchase activity against a very high earnings multiple and recent share-price weakness. The combination of elevated valuation metrics and mixed analyst responses suggests continued market scrutiny as more quarterly data become available.
Key points
- BTIG reaffirmed a Neutral rating on Upstart, citing improved credit metrics in Q4 2025 and stable December trends.
- Upstart’s Upstart Monthly Index moved back to a 1.4-1.5 range in October and remained below 1.5 in November, signaling potential for higher transaction volumes versus Q3 2025.
- Institutional demand persists: Castlelake committed to purchase up to $1.5 billion in consumer loans, the third such agreement with Upstart.
Risks and uncertainties
- Valuation risk - The stock trades at a P/E of 176.37 and is indicated as overvalued relative to Fair Value estimates, which may limit upside for equity investors. This impacts equity markets and fintech sector valuations.
- Conversion and underwriting risk - Upstart’s decision to lower approval rates and raise pricing to manage uncertain economic conditions has affected conversion rates, introducing execution risk to loan origination volumes and revenue. This affects consumer lending and fintech revenue trends.
- Analyst sentiment divergence - Mixed analyst actions and revised price targets highlight uncertainty about near-term performance, which may influence investor sentiment and trading in the fintech and financial services sectors.
Conclusion
BTIG’s Neutral rating reflects a balance between improving credit indicators and enduring valuation concerns. The company’s strong year-over-year revenue growth and ongoing institutional loan purchase commitments sit alongside a markedly elevated P/E ratio and divergent analyst views, leaving the stock positioned for continued scrutiny as subsequent performance data are released.