Upstart jumps 27% as full-year sales forecast smashes estimates

• Shares of Upstart surged as much as 27% on Wednesday after it reported strong second-quarter earnings results.
• The alternative lender said its second-quarter revenue grew more than 1,000% year-over-year.
• Upstart boosted its full-year revenue guidance to $750 million, well ahead of analyst estimates.
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Upstart surged as much as 27% on Wednesday after it reported second-quarter earnings that surpassed analyst estimates and raised its 2021 guidance.

Upstart is an alternative lender that uses artificial intelligence and non-traditional variables like education and employment to predict creditworthiness and give personal loans.

The company saw soaring growth in the second-quarter, with revenue growing more than 1,000% year-over-year

Here are the key numbers:

Revenue: $194.0 million, versus analyst estimates of $158 million
Adjusted earnings per share: $0.62, versus analyst estimates of $0.25

On top of the strong earnings results, Upstart raised its full-year revenue guidance to $750 million from its prior guidance of $600 million. Analysts had been expecting $601 million in revenue for the year. Upstart also expects higher margins for the year, guiding for contribution margin of 45%, above its prior guidance of 42%.

Upstart partners with banks to originate loans. In the second quarter, its bank partners originated 286,864 loans totaling $2.8 billion, representing year-over-year growth of 1,605%.

The strong earnings results and guidance led to price target increases from analysts, including Citi, which raised its price target to $205. That price target represents potential upside of 19% from Wednesday's high of $172. Bank of America also raised its price target to $200.