Compass Point analyst Laurie Havener Hunsicker on Thursday has downgraded Berkshire Hills Bancorp (NYSE:BHLB) to Sell from Neutral as its partnership with artificial intelligence lending platform Upstart (NASDAQ:UPST) raises additional risks.
BHLB stock is slipping 1% in premarket trading.
Hunsicker highlighted that Berkshire Hill's (BHLB) addition of more Upstart (UPST) loans will push net interest margin and loan loss provisions higher, according to a note written to clients.
As a result, 2022 earnings estimate of $1.74 per share was lifted from $1.63 in the prior view, but 2023 EPS was lowered to $1.89 from $2.06, the note says. This compares with the average analyst EPS estimate of $1.80 in 2022 and $2.09 in 2023.
Recall last year when Berkshire Hills (BHLB) teamed up with Upstart (UPST) in a bid to offer unsecured lending to its clients. Since then, the regional lender has been using Upstart's platform to approve more creditworthy borrowers for high yielding loans.
On April 20, Berkshire Hills Bancorp adjusted EPS of $0.43 topped the $0.41 consensus estimate.