Upstart Holdings, Inc. (NASDAQ:UPST) shares are trading higher Tuesday on continued momentum from Monday when BTIG analyst Vincent Caintic upgraded the company from a Neutral rating to a Buy rating and announced a $43 price target. Also, the company signed a forward-flow agreement with Eltura Ventures and Aperture Investors.

Bank Charter Seen As Key Catalyst

Caintic upgraded the stock after Upstart said it plans to file applications with the OCC and FDIC to form an insured national bank, Upstart Bank. The analyst said the market largely overlooked the announcement, noting that a bank charter could address the company's exposure to private-credit funding cycles.

"While there's no guarantee that Upstart will successfully become a bank, we think UPST's current share price is both 1) not pricing any potential upside from becoming a bank, and 2) pricing in significant liquidity risk of Upstart losing funding sources," Caintic wrote.

The $43 price target implies about 67% upside from recent levels. BTIG said a bank charter could significantly reduce costs, estimating Upstart could boost annual earnings per share by 60% by lowering origination-related expenses.

According to the firm, cost savings would come from reduced fees paid to partner banks, elimination of interest income lost during loan holding periods and a streamlined regulatory structure under a national bank charter.

BTIG also noted that a bank charter would provide access to deposits and reduce reliance on private-credit markets, while enabling Upstart to operate under a single regulatory framework across all 50 states. The company previously said approximately 40,000 potential customers went unserved in 2024 due to geographic restrictions.

The firm added that capital markets remain open for Upstart, pointing to its first asset-backed securities deal of 2026, which priced with tighter spreads than its prior issuance.

Forward-Flow Agreement Adds Funding Support

Upstart also announced a forward-flow agreement with Eltura Capital Management, Aperture Investors and co-investors, under which the group agreed to purchase up to $1 billion of consumer loans originated on the platform.

The 12-month arrangement builds on an existing relationship and represents the first forward-flow agreement of this scale between the parties.

The company said the agreement supports a more robust and diversified funding ecosystem for its loans.

Upstart Shares Spike

UPST Price Action: At the time of publication, Upstart shares are trading 3.81% higher at $28.85, according to data from Benzinga Pro.

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