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Goldman Sachs cuts Duolingo as it faces competitive pressure, Fiverr raised to buy



© Reuters Goldman Sachs cuts Duolingo as it faces competitive pressure, Fiverr raised to buy

Goldman Sachs analysts adjusted their ratings for several internet stocks in a note Friday, upgrading Fiverr International (NYSE:) to Buy from Neutral, downgrading ZipRecruiter (ZIP) to Neutral from Buy and downgrading Duolingo (DUOL), Coursera Inc. (NYSE:) and Chegg (NYSE:) to Sell from Neutral.

The investment bank, ahead of Q4 earnings season, updated its operating estimates and valuation work across its small and mid-cap (SMID cap) company coverage.

When it comes to FVRR, the bank said freelance marketplaces have generated a debate around the potential impacts of generative AI. “The company continues to position its platform and products for increased levels of personalization and matching capabilities, along with more complex projects, with many of those initiatives driven by AI,” said Goldman Sachs. “Based on this framework against current valuation/share price, we now see a positive risk/reward skew on the stock.”

For ZIP, Goldman maintained a $15 price target on the stock. They see a more balanced risk-reward skew in the stock following a more than 20% increase in the company’s share price since its last Q3 2023 earnings results in early November.

The DUOL price target was kept at $160. Goldman expects there to be upward pressure on sales and marketing as a result of the competitive environment intensifying, with Alphabet recently making an announcement in October 2023 to allow language learners to practice speaking on Search.

The COUR price target was lowered to $14 from $18 per share, with Goldman Sachs noting weaker enterprise revenues “in the form of lower ASP and a lower number of enterprise clients as the overall hiring and enterprise L&D environment remains tight with little visibility into a recovery.”

CHGG’s price target was cut to $8 from $10 per share. Goldman’s analysts said they have lowered revenue estimates to reflect a lower subscriber count “as the competitive environment intensifies, particularly as it relates to ChatGPT and other emerging competitors leveraging generative AI.”

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