A Fresh Look at Upstart: Why BofA Securities’ Shift Matters Now

Upstart Holdings (UPST), a pioneering AI-powered lending platform, has just caught the market’s eye with a noteworthy analyst upgrade. BofA Securities has elevated its rating from Underperform to Neutral, raising its price target to $53 from an unspecified lower level. With Upstart’s shares recently trading at $50.03, this signals a modest but potentially meaningful upside in a sector navigating rapid disruption. For self-directed investors, analyst upgrades—especially from a heavyweight like BofA—can be an early indicator of a shifting narrative, reflecting both sector sentiment and company-specific inflection points.

Upstart’s business model leverages artificial intelligence to assess credit risk, aiming to outperform traditional FICO-based lending models. This data-driven approach enables banks and credit unions to expand access to credit while managing risk more precisely. Given ongoing fintech volatility and the cyclical nature of lending, every analyst move deserves close scrutiny. Today’s BofA upgrade suggests a recalibration of risk/reward—even if it stops short of outright bullishness.

Key Takeaways:

• Potential Upside: The new $53 price target offers a potential upside of about 6% from current levels.

• Stock Price Action: Shares have rebounded from last year’s lows near $20, but remain well off their 52-week high above $96. Recent momentum shows stabilization around the $50 mark.

• Recent News Flow: Coverage highlights both opportunity and skepticism; Upstart’s CEO is engaging at fintech conferences, while outlets like Zacks and Motley Fool spotlight ongoing volatility and growth potential.

• Additional Observations: Technical indicators point to an overbought environment (RSI near 74), and volumes have recently tapered, suggesting a pause after a strong rally.

Analyst Re-Rating: Why BofA’s Shift Carries Weight

The Analyst and the Upgrade

BofA Securities ranks as one of Wall Street’s most influential institutions, with deep coverage across fintech and lending. Their move from Underperform to Neutral for Upstart is meaningful—not just for the change itself, but for the signal it sends to institutional allocators. BofA’s coverage is typically rigorous and conservative, so a removal of the negative tilt suggests a reassessment of risk factors that previously dominated the narrative: credit quality, funding costs, and AI adoption.

“BofA’s upgrade aligns with recent stabilization in Upstart’s fundamentals and signals a less bearish outlook amid sector headwinds.”

It’s also notable that BofA did not leap to a Buy—underscoring both the progress and the persistent uncertainties facing Upstart in a competitive, fast-evolving lending space.

Upstart’s Business Model: The AI Lending Edge

Upstart’s core advantage is its proprietary AI models, which process nontraditional data points to predict borrower risk. This enables partner banks and credit unions to approve more loans without increasing default rates. Revenue is generated primarily from referral fees, servicing fees, and securitization gains.

The company’s mission—"expanding access to affordable credit"—places it at the intersection of fintech innovation and regulatory scrutiny. While this has resulted in significant growth and volatility, it also offers a differentiated value proposition versus legacy lenders.

Financials and Recent Performance: Volatility, Recovery, and Cautious Optimism

Key Metrics (Past Year)

• Stock Price: From $20.60 (Aug 2024 low) to $96.43 (Feb 2025 high), now at $50.03.

• Average Daily Volume: ~6.6 million shares, with recent sessions showing much lower activity—indicative of consolidation.

• Technical Readouts:

  • VWAP: $49.13

  • 20-day EMA: $44.91

  • RSI: 74.5 (overbought)

  • Bollinger Bands: Upper at $51.02, Lower at $33.13

Price and Sentiment Trends

The past year has been a rollercoaster. Upstart’s shares surged over 300% from their August trough to February peak, before giving back half those gains. The sentiment ratio (days up vs. days down) sits below 0.5, indicating more negative than positive sessions, but the recent price action is constructive—hovering near technical resistance but not retreating sharply.

Volatility and Volume

• Average Daily Volatility: 3.47%—high, but typical for high-beta fintechs.

• Volume: Tapered recently to ~153k shares (April 29), down from highs above 46 million.

Recent News: Policy, Partnerships, and Public Perception

• Motley Fool flags "room for growth" in Upstart’s lending model, highlighting its potential to disrupt traditional credit.

• Zacks notes recent price softness amid broader market upticks, underscoring the stock’s sensitivity to sentiment and macro moves.

• Business Wire reports CEO Dave Girouard’s participation at major fintech conferences, signaling continued efforts to court institutional investors and strategic partners.

"Upstart’s CEO to Participate in Fireside Chat at the Barclays 15th Annual Emerging Payments and FinTech Forum." (Business Wire)

Technicals & Risk: Overbought or Consolidating?

• RSI at 74.5: Typically a warning of short-term overextension.

• Bollinger Bands: Price is near the upper band, often a precursor to pullback or sideways action.

• Volatility: Still elevated, which means that any catalyst—positive or negative—can trigger sharp moves.

Potential Upside and Downside: Framing the Risk/Reward

With BofA’s $53 target and UPST trading at $50.03, the implied upside is 6%. For a stock with such volatility, this is modest—but it reflects a significant shift from BofA’s prior bearish stance. The upgrade’s weight is magnified by BofA’s credibility and sector expertise.

• If Upstart executes on growth and credit models hold up: The stock could retest higher levels, especially if the market warms to fintech risk again.

• If credit risk rises or AI-driven models fall short: The downside risk remains material, as seen in the stock’s historical drawdowns.

Conclusion: What Does This Upgrade Mean for Investors?

For sophisticated investors, the BofA upgrade is less about chasing immediate upside and more about recognizing a potential inflection point. The move from Underperform to Neutral, while not overtly bullish, removes a significant overhang. Combined with technical stabilization and active management engagement, Upstart is recalibrating its risk profile in the eyes of the Street.

In a sector where sentiment can shift rapidly, this upgrade may mark the start of a new narrative phase—one that rewards nimble, data-driven analysis and close attention to fundamental execution.

Upstart at a Glance

Final Thought:
BofA’s upgrade doesn’t signal an all-clear, but for investors attuned to sector inflections and technical signals, Upstart’s recalibrated outlook deserves a closer look—especially as the fintech lending landscape continues to evolve.