Upwork stock price target raised to $21 from $18 at RBC Capital

Investing.com - RBC Capital has raised its price target on Upwork Inc. (NASDAQ:UPWK) to $21.00 from $18.00 while maintaining a Sector Perform rating following the company’s third-quarter results. According to InvestingPro data, this target aligns with broader analyst sentiment, as the stock appears undervalued with a P/E ratio of just 9.34 and analysts setting targets as high as $27.

The firm noted that Upwork ’s Q3 performance showed positive signs as artificial intelligence appears to be becoming more of a tailwind than a headwind for the company. Key positives included accelerated Gross Services Value (GSV) growth with management projecting further acceleration into 2026. This optimism is supported by Upwork’s impressive 77.88% gross profit margins and EBITDA of $131.53 million in the last twelve months.

RBC Capital highlighted that Upwork’s active customer growth returned to modest growth in Q3, down just 30 basis points quarter-over-quarter on a trailing twelve-month basis. The company’s product focus on small and medium-sized businesses, along with a revamped enterprise offering enhanced by acquisitions, is expected to drive growth in the second half of 2026 and fiscal year 2027. InvestingPro analysis shows Upwork has a "GREAT" overall financial health score of 3.34, with particularly strong scores in growth (4.08) and profitability (4.07).

Despite the positive momentum, RBC Capital pointed out that acquisitions announced last quarter drove most of the return to GSV growth, with Marketplace GSV growing only 1%. The firm also noted that Upwork’s category exposure to AI remains at 5%, consistent with prior updates where this has been a net headwind. Still, Upwork maintains a strong financial position with more cash than debt on its balance sheet and a current ratio of 3.36, indicating solid liquidity.

The analyst observed that take rate drove three-quarters of Marketplace revenue growth, while also mentioning that Upwork’s fiscal year GSV hasn’t materially grown since 2022 despite the current strong momentum heading into 2026. For investors seeking deeper insights, InvestingPro offers comprehensive Pro Research Reports on Upwork and 1,400+ other US equities, with additional ProTips highlighting the company’s strong return over recent months and potential for continued profitability.

In other recent news, Upwork Inc. reported its third-quarter 2025 financial results, surpassing analysts’ expectations with an earnings per share of $0.36, compared to the forecast of $0.28. Revenue also exceeded predictions, reaching $201.7 million against the anticipated $193.35 million. Canaccord Genuity reiterated its Buy rating for Upwork, highlighting the company’s strong performance in the quarter, particularly in revenue and profitability metrics. The firm noted the return to growth in Upwork’s Gross Service Value, driven by investments in AI features.

Goldman Sachs also maintained a Buy rating on Upwork, raising its price target from $24 to $25, citing the company’s strong Q3 performance. The outperformance was attributed to contributions from AI categories and the adoption of Upwork Business Plus. Upwork’s AI-related work saw significant growth, accelerating to 53% year-over-year. Additionally, churn rates decreased by 70 basis points sequentially, with only a slight decline in active clients quarter-over-quarter. These recent developments underscore the positive momentum in Upwork’s business strategy and execution.

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