Street Calls of the Week
Investing.com - Evercore ISI maintained its Outperform rating and $540 price target on Duolingo Inc. (NASDAQ:DUOL) following the company’s seventh annual DuoCon virtual product event held on Monday. The company has demonstrated strong financial performance with impressive revenue growth of ~40% over the last twelve months and maintains healthy gross profit margins of 72%.
The research firm highlighted several key developments from the event, including updates to the Videocall with Lily feature, insights into the company’s A/B testing processes, and details about the new Chess subject launched in April 2023. According to InvestingPro, Duolingo’s strong financial health and robust cash position support its continued product innovation initiatives.
Evercore ISI noted that Duolingo continues to "materially innovate and successfully improve upon its product offerings" across its language learning platform.
The firm emphasized that this "consistent and substantial product innovation" would likely be the primary driver of Duolingo’s fundamental performance and stock price appreciation going forward.
Duolingo’s DuoCon event serves as the company’s annual showcase for new features and product developments within its educational technology platform.
In other recent news, Duolingo has been the focus of several analyst ratings and a regulatory investigation. Morgan Stanley and KeyBanc both reiterated their Overweight ratings on the company, with price targets set at $500 and $460, respectively. These firms expressed confidence in Duolingo’s ability to enhance its market position following updates announced at the Duocon event, such as improvements to the Video Call feature, Duolingo Score, and the introduction of Duolingo Chess. Meanwhile, Raymond James maintained a Market Perform rating, while JMP reiterated a Market Outperform rating with a $500 price target, citing optimism despite concerns about user growth.
In regulatory developments, Hungary’s competition authority has initiated an investigation into Duolingo’s marketing practices. The probe focuses on potentially misleading claims regarding the platform’s effectiveness in teaching languages and alleged psychological pressure on users to subscribe to paid services. These recent developments highlight both the strategic advancements and challenges faced by Duolingo in the current market landscape.
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