Language Learning Stock Soars After Beat-and-Raise

At least three analysts hiked their price targets on the stock

Deputy Editor
Feb 29, 2024 at 10:26 AM
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Duolingo Inc (NASDAQ:DUOL) stock is 19.3% at $233.24 higher this morning, after the language learning firm announced a massive fourth-quarter win. Specifically, Duolingo beat top-and bottom-line estimates, with an earnings per share of 26 cents on revenue of $151 million, and revealed stronger-than-expected first-quarter and full-year revenue outlooks.

In response, Needham, Barclays, and BofA Global Research all hiked their price targets. The lattermost issued the most upbeat raise, moving up to $260 from $230. Despite a more than 108% year-over-year lead, analysts are mostly sidelined -- seven of 12 recommend a "hold" or worse -- so upgrades look overdue. 

Call traders are more optimistic. This is per DUOL's 10-day call/put volume ratio of 2.77 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 88% of readings from the past year, showing calls being snatched up at a much faster-than-usual rate in the last two weeks.  

This optimism is rolling over into today's trading. Already, 4,449 calls have been exchanged compared to 1,593 puts, for total options volume that's 12 times the intraday average amount. New positions are opening at the top two most popular contracts, the respective March 250 and 230 calls. 

Duolingo stock earlier traded as high as $240.77, which is within striking distance of its mid-December record peak. The security is also pacing for its sixth-straight daily win, its longest streak since early November, and its best day since Nov. 9. Should gains hold, DUOL should be able to conquer its year-to-date breakeven mark. 

 

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