Bank of America downgraded DUOL to "neutral"
Duolingo Inc (NASDAQ:DUOL) is trading at "peak valuation," according to a bear note at Bank of America. The analyst downgraded DUOL to "neutral" from "buy," but raised its price target to $375 from $355. In addition to its valuation concerns, the analyst in question said the chances that the language learnings company beats expectations for its next quarterly report are slim.
Down 1.3% before the bell and looking to open around $357, Duolingo stock remains within shooting distance of its record highs. Specifically, the shares hit an all-time high of $378.48 on Dec. 5, extending their 12-month lead to more than 70%.
Coming into the session, nine of 16 covering brokerages rated the security a "buy" or better, which leaves room for even more downgrades to roll in. What's more, the average 12-month target price of $336.29 is a 7.1% discount to last night's close.
Shares could also face headwinds should options traders change their tune. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratios of 2.07 ranks higher than 93% of readings from the past year.
Options are an intriguing way to bet on the stock right now, as it tends to outperform volatility expectations. This is per DUOL's Schaeffer's Volatility Scorecard (SVS), which sits at an elevated 87 out of 100.