Upstart, Affirm raised to Neutral at Wedbush on lower borrowing costs

Affirm Holdings (NASDAQ:AFRM) and Upstart Holdings (NASDAQ:UPST) shares gained in Monday premarket trading after Wedbush Securities upgraded the fintechs to Neutral from Underperform as analyst David Chiaverini thinks both firms stand to benefit from lower interest rates.

Affirm (AFRM), the buy now, pay later platform, saw its stock advance 1.4% at press time, while AI lending platform Upstart (UPST) perked up 3.4%.

On Affirm (AFRM), Chiaverini believes a lower rate environment “should be beneficial to the company on several fronts, including lower funding costs and incremental [gross merchandise volume] growth,” he wrote in a note to clients.

Upstart (UPST), meanwhile, is expected to see a positive inflection in originations and adjusted EBITDA in the second half of 2024, amid improving credit quality metrics and lower rates, the analyst wrote in a separate note.

“The question that remains, in our view, is if UPST can scale originations meaningfully higher over time while maintaining credit metrics within desired parameters.”

Seeking Alpha’s Peer page compares numerous metrics of the two fintechs.