A New Bull Case Emerges for Upbound Group with 186% Price Target

Rent-A-Center US76009N1000

Mizuho Securities has initiated coverage on Upbound Group, Inc. (NASDAQ: UPBD), the parent company of Rent-A-Center, with a bullish "Outperform" rating. The firm set a price target of $51.00 per share. Given the stock's recent trading level of $17.79, this projection implies a potential upside of approximately 186%. This optimistic stance from the analyst stands in stark contrast to the equity's significant decline over the past year, raising the question of whether it can catalyze a reversal.

Upbound Group recently reported its third-quarter results, which modestly exceeded market expectations. The company posted earnings per share (EPS) of $1.00, compared to a consensus estimate of $0.98. Revenue reached $1.16 billion, slightly above the forecasted $1.15 billion. Despite this beat, the stock trades near its 52-week low of $15.82, having fallen 41.6% over the last twelve months. Its 52-week high stands at $32.10. The company's current market capitalization is approximately $1.03 billion.

A key focus for investors is the dividend, which yields about 8.8% based on a quarterly payout of $0.39 per share, or $1.56 annualized. However, this high yield comes with a notable caveat: the payout ratio is 107.59%, indicating the distributed dividends exceed reported earnings. The next ex-dividend date is December 17, 2025.

Analyst Conviction Versus Market Skepticism

Mizuho's $51 price target represents a significant divergence from the current market valuation. The initiation of coverage with such a high target is a direct counterpoint to the prevailing negative sentiment that has driven the share price downward. The analyst's confidence suggests a belief that the market is substantially undervaluing Upbound Group's prospects, though this view alone does not alter the existing negative technical trends.

Institutional Activity and Key Risk Factors

Some institutional investors have shown interest. Beacon Financial Group, for instance, disclosed a purchase of 75,876 shares in the third quarter, a transaction valued at roughly $1.79 million, increasing its stake by about 0.13%.

The primary risks highlighted for the company are twofold: its substantial debt load and the sustainability of its dividend policy due to the payout ratio exceeding 100%. The dividend's longevity is contingent upon the company's ability to generate sufficient operational cash flow to support it.

The Path Forward

The future trajectory of Upbound Group's stock price appears to hinge on two concrete conditions. First, the company must demonstrate the ability to deliver consistently higher profits and stronger cash flows in upcoming quarters. Second, it needs to reduce its debt burden and bring the dividend payout ratio to a sustainable level below 100%. Achievement of these objectives would lower the risk profile and make Mizuho's ambitious price target more attainable. If earnings, cash flow, and the balance sheet situation show no improvement, the established downtrend is likely to persist.