Duolingo drops as BofA turns bearish ahead of earnings, says valuation 'too high'
BUZZ-Duolingo drops as BofA turns bearish ahead of earnings, says valuation 'too high' ** Language-learning platform Duolingo's DUOL.O shares down 3% to $131.75 on Tues after BofA Global Research downgrades to 'underperform' from 'neutral', citing valuation
** Broker cuts PT by $10 to $93, implying about 32% downside to stock's last close
** BofA analyst Omar Dessouky says stock's 20% rally since early June appears to coincide with an inflection in monthly-active users in June, likely due to a one-time promotion with Airbnb ABNB.O, adding that the inflection is not sustainable
** Dessouky says DUOL's shares now valued at 16x his estimate for CY27 EBITDA, a 6x premium to midcap subscription stocks, whose EBITDA growth is similar to DUOL's
** Pittsburgh, Pennsylvania-based co slated to report Q2 results on Weds, Aug 5, after market close
** Of 25 brokers covering the stock, recommendation breakdown is 4 "strong buy" or "buy", 19 "hold" and 2 "sell"; median PT $110, per LSEG data
** With the decline, stock down 25% YTD compared to ~13% advance in the Nasdaq .IXIC
(Lance Tupper is a Reuters market analyst. The views expressed are his own)
((lance.tupper@tr.com 1-646-279-6380))