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Investing.com - BofA Securities maintained its Neutral rating on Duolingo stock (NASDAQ:DUOL) while lowering its price target to $370 from $450 ahead of the company’s third-quarter earnings report. The company maintains strong financial health with a current ratio of 2.8x and holds more cash than debt on its balance sheet.
The language-learning platform is scheduled to report its quarterly results on November 5 after market close. BofA forecasts third-quarter revenue of $261.5 million, slightly above the Street consensus of $260.6 million, and EBITDA of $72 million, in line with analyst expectations. The company has demonstrated robust growth with revenue increasing nearly 40% over the last twelve months.
BofA projects daily active user (DAU) growth of 35% and monthly active user (MAU) growth of 18%, both slightly below Street estimates of 36% and 20%, respectively, citing softer user app trends according to Sensor Tower data.
For the full fiscal year, BofA estimates revenue of $1.02 billion and EBITDA of $295 million, marginally above Street estimates and exceeding the high end of Duolingo’s own guidance.
The price target reduction from $450 to $370 reflects a multiple compression to 13x 2026 EV/Sales from the previous 16x, which BofA attributes to the stock’s recent re-rating in the market.
In other recent news, Duolingo has been the focus of several analyst updates. UBS adjusted its price target for Duolingo to $450, citing a slowdown in daily active user growth, which they forecast to be 33% and 27% year-over-year for the third and fourth quarters, respectively. Meanwhile, Citizens has maintained its Market Outperform rating with a $500 price target, noting that social engagement is a key indicator for user activity despite the lack of a corresponding increase in daily active users. KeyBanc also reiterated its Overweight rating, keeping a $460 price target, and highlighted that user growth appears slower than expected, with a 33% year-over-year increase anticipated for the third quarter. DA Davidson maintained a Neutral rating and a $300 price target, observing improvements in active users in September compared to August. These assessments underscore a range of perspectives on Duolingo’s growth outlook and user engagement trends.
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