Analyst Expects "Premium" Revenue Growth from Duolingo

Duolingo stock has taken a step back since a positive post-earnings response

Deputy Editor
Mar 11, 2024 at 8:55 AM
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Duolingo Inc (NASDAQ:DUOL) stock is 1.4% higher before the bell, after J.P. Morgan Securities initiated bullish coverage with an "overweight" rating and a $270 price target -- a 26.5% premium to Friday's close. The analyst in coverage expects "premium" revenue growth from the online language learning company, citing its 'freemium' model as a significant advantage. 

Following the earnings event, Duolingo stock made a run towards its Dec. 19 record high of $245.87. Since that test though, the shares fell more than 10%, ceding their year-to-date breakeven mark.

That level could be reclaimed amid an unwinding of pessimism. This marks a fifth bull note following the company's better-than-expected fourth-quarter earnings results on Feb. 28. Yet there's still room to follow J.P. Morgan's lead, with seven of 12 still rating DUOL a "hold" or worse. What's more, short interest is unwinding -- down 8.8% in the most recent reporting period -- yet the shares sold short still account for 5.8% of DUOL's total available float.  

Options trading remain call-heavy, likely due to the longer term 75.8% year-over-year lead. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 1.88 ranks higher than 86% of readings from the past 12 months.


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