Bank of America Securities analyst Curtis Nagle reiterated a Hold rating on Duolingo (DUOL – Research Report) today and set a price target of $260.00.
Curtis Nagle’s rating is based on a careful analysis of Duolingo’s financial performance and market positioning. While Duolingo has outperformed expectations in the fourth quarter with solid revenue and EBITDA above the Street’s estimates, and has shown impressive year-over-year growth in subscriptions and paid users, Nagle notes that this rapid growth may not be sustainable in the long term. Furthermore, the company’s guidance suggests a deceleration in bookings growth for 2024, although it continues to show potential for user engagement and retention.
Nagle acknowledges Duolingo’s efforts in adjusting its pricing tiers and the promise of its family plan offering, which could enhance monetization and lifetime value. Despite the positive outlook with increased revenue and EBITDA estimates for the coming years, the hold rating stems from the belief that the market has already priced in Duolingo’s sector-leading growth. The current trading price significantly exceeds the average forward EV/Sales multiple, suggesting a premium valuation compared to peers. Therefore, while recognizing Duolingo’s strong execution and market leadership, Nagle maintains a Neutral stance, considering the growth expectations reflected in the share price.
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Duolingo (DUOL) Company Description:
Duolingo Inc is a mobile learning platform to learn languages and the top-grossing app in the Education category on both Google Play and the Apple App Store. It has three predominant sources of revenue; time-based subscriptions, in-app advertising placement by third parties, and the Duolingo English Test.
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