Duolingo stock rating reiterated at Market Outperform by JMP

Investing.com - Citizens JMP has reiterated its Market Outperform rating on Duolingo Inc. (NASDAQ:DUOL) with a price target of $500.00. According to InvestingPro data, the company currently trades at a market capitalization of $12.86 billion and has demonstrated impressive revenue growth of 39.51% over the last twelve months.

The research firm maintains its positive outlook on the language learning platform despite recent investor concerns about slowing user growth, which JMP believes is temporary.

JMP expects Duolingo to sustain its bookings growth in the near term through increased adoption of its Family Plan and Max subscription options, similar to trends observed in the previous quarter.

The firm describes Duolingo as a "one-of-one business" with a freemium model that creates a significant competitive advantage, while its focus on entertainment and engagement differentiates it from other educational tools.

JMP views Duolingo as transforming into a broader educational platform teaching multiple subjects, with artificial intelligence enabling more personalized learning experiences, and considers the recent stock pullback as an opportunity for investors.

In other recent news, Duolingo is under investigation by Hungary’s competition authority for potentially misleading claims about the effectiveness of its language learning program. The Hungarian regulator alleges that the company may mislead users regarding its teaching capabilities and apply "psychological pressure" to encourage subscriptions to paid services. Meanwhile, KeyBanc Capital Markets has maintained its Overweight rating on Duolingo, citing the upcoming Duocon event as a potential sentiment booster. The firm notes improvements such as engaging TikTok content and enhanced Video Call functionality as potential factors for user stabilization. Citizens JMP also maintains a Market Outperform rating, highlighting a potential 10% EBITDA upside by 2027 due to directing new subscribers to its open web platform. Baird has initiated coverage on Duolingo with a Neutral rating, recognizing the company’s effective product development and commitment to innovation. Additionally, Google Translate has introduced new AI-powered language learning features, though this development has not affected Duolingo’s stock.

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