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Takeaways
- Morgan Stanley analysts initiated coverage of Duolingo with an "overweight" rating and a $435 price target—the highest on Wall Street.
- Visible Alpha reports that the consensus analyst price target of Duolingo is $383.
- Analysts cited the company's user growth, strong and expanding margins, and generative AI features.
Morgan Stanley analysts believe Duolingo is speaking their language. They have set a high price target for the stock of the language-learning company.
In a note published on Wednesday, the analysts cited “a rare combination of rapid user expansion, strong and expanding margins and clear Gen AI upside,” as reasons for initiating a “overweight” and $435 target price, well above Visible Alpha’s average around $383.
Morgan Stanley believes Duolingo could see a 26 percent five-year compound annual growth because it still has a lot of language learners to target.
Morgan Stanley analysts stated in the report that they see DUOL’s consumer internet assets as being among the best. “Duol’s unique, gamified learning approach allows it to combine mobile gaming and language-learning markets for a $220B [total addressable market]It is a new phenomenon. [about] 0.5% share.”
Morgan Stanley analysts also see the potential for the app’s earnings to increase, as it is currently monetizing at a lower rate compared to its competitors. The bank’s growth forecasts are heavily influenced by its Gen AI subscription Max tier, which is ad free and allows users role-playing and personalized explanations.
Duolingo shares are up around 10% in recent trading and roughly 70% over the last year.
