"Fintech welcomes favorable environment! JP Morgan: Upstart (UPST.US) risk-reward ratio best, bullish to $88."

JPMorgan recently upgraded the rating of the financial technology lending platform Upstart (UPST.US), citing strong business volume growth and sustained profit improvement in the backdrop of a stable consumer credit environment and expectations of interest rate cuts. Analysts Reginald Smith and Charles Pearce stated, "We believe that stable credit trends and (potential) rate cuts create a favorable environment for financial technology companies until the second half of 2025. Looking beyond the second half of 2025, we expect to see how the covered companies adapt and embrace the fields of agent e-commerce and cryptocurrencies/stablecoins, and expand digital banking product services." JPMorgan raised Upstart's rating from "Neutral" to "Overweight" and set a target price of $88 by the end of 2026. The research report stated, "In the context of a favorable macro environment, we are more bullish on experienced and mature financial technology lending platforms and believe that Upstart presents the best risk-return ratio among personal loan institutions." The analysts added, "Although revenue and adjusted EBITDA have been raised this year, Upstart's stock price has underperformed the market since the announcement of the second-quarter financial report, falling by about 20%, mainly due to market concerns about its balance sheet expansion due to the issuance of new convertible bonds by CKH HOLDINGS." The research report also emphasized, "The demand from loan buyers remains strong, and we believe that the continuous increase in the nominal loan size and potential profit margin expansion still has potential." On the other hand, JPMorgan downgraded the rating of Kaspi.kz (KSPI.US) from "Overweight" to "Neutral," and CompoSecure (CMPO.US) and Riskified (RSKD.US) from "Neutral" to "Underweight." Regarding CompoSecure, JPMorgan pointed out, "Its growth has been fluctuating for several quarters, and the full-year performance guidance is still concentrated in the second half of the year, indicating limited visibility. The current stock price is already at a high level, seemingly factoring in additional gross margin expansion and future merger expectations, but management has not provided clear guidance on this." For Riskified, the investment bank believes that its revenue and transaction growth rates lag behind the overall e-commerce industry and peers in discretionary spending categories such as Shopify (SHOP.US) and Affirm (AFRM.US). "Furthermore, we are increasingly skeptical whether Riskified can achieve the 15-20% adjusted EBITDA profit margin target by 2026, which may create sustained pressure on the stock price." The report stated, expressing a more positive outlook for mature businesses with stronger profitability and diversified e-commerce layout in the financial technology sector, such as Shopify and Affirm. Regarding Kaspi, JPMorgan stated, "Despite its second-quarter performance exceeding market expectations and driving the stock price up by over 20%, organic growth excluding the Hepsi business still faces a series of macro and regulatory headwinds, which may persist at least until the end of the year." "Given the opaque macro environment in Kazakhstan, we believe it is prudent to adopt a wait-and-see approach at the current level and consider a more proactive stance once growth headwinds and dividend payments resume."