Gold prices steady as traders assess Fed rate outlook after soft US data
Investing.com - UBS maintained its Buy rating and $500 price target on Duolingo Inc. (NASDAQ:DUOL) on Monday, despite expressing tactical caution ahead of the language learning platform’s upcoming earnings report. According to InvestingPro data, the stock currently trades at a P/E ratio of 167x and has delivered an impressive 111% return over the past year, though analysis suggests the stock is currently trading above its Fair Value.
The firm made no changes to its fiscal year 2025 headline bookings and EBITDA estimates, which remain at 30% year-over-year growth and $288 million, respectively, compared to Street consensus of 29% and $281 million. UBS did trim its expectations for second-half 2025 ex-FX growth to offset a 170 basis point incremental foreign exchange tailwind. The company has demonstrated strong financial health, earning a GREAT rating from InvestingPro, with robust liquidity indicated by a current ratio of 2.68.
UBS also reduced its third-quarter daily active user (DAU) growth forecast to 37% year-over-year from the Street’s 42%, reflecting 3.1 million quarter-over-quarter net additions. This adjustment aligns with second-quarter data suggesting growth could come in at or slightly below the company’s 40-45% year-over-year guidance.
The investment firm noted that Duolingo shares have declined 30% from May all-time highs, indicating market awareness of these potential growth adjustments. UBS expressed concern that the stock, trading at 40 times fiscal year 2026 EBITDA, may not respond well if the company merely reiterates its full-year guidance, despite Duolingo’s track record of conservative forecasts.
Despite near-term caution, UBS remains positive on Duolingo’s long-term prospects, citing multiple growth levers to sustain over 40% three-year EBITDA compound annual growth rate, including its Max subscription tier, price increases, App Store changes, and the early-stage opportunity in English language learning. The company’s strong fundamentals are evident in its impressive 72.25% gross margin and 39.14% year-over-year revenue growth. For deeper insights into Duolingo’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which includes 18 additional ProTips and extensive financial metrics.
In other recent news, Duolingo has been the subject of several analyst updates and company developments. JPMorgan has lowered its price target for Duolingo to $500 due to concerns over user growth and subscription churn, while maintaining an Overweight rating. Conversely, Evercore ISI has raised its price target for Duolingo to $540, citing favorable market trends and strong survey results in the U.S. and Germany. DA Davidson also adjusted its price target to $500, noting that Duolingo’s daily active user growth is outperforming consensus estimates. In corporate governance, Duolingo’s shareholders approved all proposals at the 2025 Annual Meeting, including the election of board members and the ratification of its accounting firm, Deloitte & Touche LLP. Additionally, Duolingo’s stock experienced a decline following Apple (NASDAQ:AAPL)’s announcement of a new Live Translation feature, which could pose competitive challenges. Despite these mixed signals, analysts like Evercore highlight Duolingo’s competitive advantages in the online language learning market. These recent developments provide a comprehensive look at the current state of Duolingo in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.