Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - KeyBanc Capital Markets has reiterated its Overweight rating and $460.00 price target on Duolingo Inc. (NASDAQ:DUOL), citing the upcoming Duocon event as a potential sentiment catalyst. The language learning company, currently trading at $309.34 with a market capitalization of $14.17 billion, has demonstrated impressive revenue growth of ~40% over the last twelve months.
The firm believes several factors could lead to user stabilization despite third-party app data not yet showing improvement. These factors include more engaging TikTok content, optimizations to the Energy feature rollout, enhancements to Video Call functionality, content expansion, and targeted marketing efforts. InvestingPro data reveals the company maintains strong financial health with an impressive 72% gross profit margin and holds more cash than debt on its balance sheet.
KeyBanc views the risk/reward profile for Duolingo as "increasingly favorable," noting that the company’s valuation recently approached its 2024 trough next-twelve-months EV/EBITDA level.
The maintained price target of $460 represents a 38.3x EV/EBITDA multiple, according to KeyBanc’s analysis.
The firm’s outlook suggests the language-learning platform company has multiple avenues to potentially reverse recent user trends, with the Duocon event marking the first of several expected steps toward improving market sentiment.
In other recent news, Duolingo has been the focus of several analyst evaluations and industry developments. Citizens JMP maintained a Market Outperform rating for Duolingo, with a $500 price target, citing a potential 10% upside to the company’s 2027 EBITDA as it shifts subscribers to its open web platform. In contrast, Baird initiated coverage with a Neutral rating and a $280 price target, noting Duolingo’s strong product development and commitment to innovation. KeyBanc upgraded Duolingo to Overweight, setting a $460 price target, and described recent AI-related challenges as temporary. Meanwhile, Morgan Stanley reiterated its Overweight rating and a $500 price target, addressing concerns about competitive threats from OpenAI’s new language learning tools. Additionally, Google Translate’s introduction of AI-powered language learning features was noted, though it did not impact Duolingo’s stock. These developments highlight the varied analyst perspectives on Duolingo’s market position and future prospects.
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