Upstart (UPST) Moves to Buy: Rationale Behind the Upgrade

Core Viewpoint - Upstart Holdings, Inc. (UPST) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][4]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for Upstart indicates expected earnings of -$0.62 per share for the fiscal year ending December 2024, reflecting a year-over-year decline of 10.7% [9]. - Over the past three months, analysts have raised their earnings estimates for Upstart by 8.7% [9]. Zacks Rating System - The Zacks rating system is based on changes in a company's earnings picture, which is a critical factor for stock price movements [2][3]. - The system classifies stocks into five groups, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [8]. - Upstart's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [12][11]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to determine the fair value of stocks, and changes in these estimates can lead to significant stock price movements [5]. - The rising earnings estimates for Upstart indicate an improvement in the company's underlying business, which is expected to positively influence its stock price [6]. Conclusion - The Zacks rating upgrade for Upstart reflects an optimistic earnings outlook, which could lead to favorable stock price movements in the near future [4][12].