UBS raises Duolingo stock price target to $275, maintains buy rating
Investing.com | Editor Natashya Angelica
Published Feb 29, 2024 09:59AM ET
On Thursday, UBS analyst adjusted the stock price target for Duolingo Inc. (NASDAQ:DUOL), the language-learning platform, raising it to $275 from the previous $230. The firm sustained its Buy rating on the stock.
The revision reflects a positive outlook on the company's financial performance, including a significant increase in subscribers and revenue projections that exceeded UBS's initial estimates.
UBS's revised price target comes after Duolingo's recent report, which indicated the addition of 100,000 more subscribers in the fourth quarter than anticipated. Furthermore, the revenue guidance for the first quarter was almost 3% higher than UBS's prior estimate at the high end.
These figures point to a robust financial trajectory for Duolingo, prompting the firm to enhance its 2024 revenue and EBITDA forecasts by 2% and $16 million, respectively.
Although user growth for Duolingo is expected to decelerate in 2024, UBS anticipates that the company will gain a larger cohort of subscribers compared to 2023.
The firm's confidence is bolstered by Duolingo's strategic plans, which include testing new pricing strategies and channeling resources to reinforce the success of its family plan offering.
UBS's analysis also highlights the strategic initiatives Duolingo is undertaking to drive growth. The company's willingness to experiment with pricing and the focused investment in its family plan are seen as key drivers for the positive adjustment in the price target.
In conclusion, UBS's updated price target for Duolingo reflects a bullish stance on the company's future financial performance. The firm's outlook is underpinned by stronger-than-expected subscriber growth and revenue forecasts, as well as strategic moves to optimize pricing and enhance product offerings.
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