Key Takeaways
- Morgan Stanley analysts initiated coverage of Duolingo with an “overweight” rating and a $435 price target—the highest on Wall Street.
- The consensus analyst price target for Duolingo is about $383, according to Visible Alpha.
- Analysts cited the company’s user growth, strong and expanding margins, and generative AI features.
Morgan Stanley analysts think Duolingo (DUOL) is speaking its language, setting a Street-high price target on the language learning company’s stock.
The analysts in a Wednesday note cited the company’s “rare combination of rapid user growth, strong and expanding margins, and clear Gen AI upside” as reasons initiating an “overweight” rating and $435 price target well above Visible Alpha’s mean around $383.
Morgan Stanley said it believes Duolingo can see a 26% five-year revenue compound annual growth rate because it has a large market of language learners left to target.
“We see DUOL as a best-in-class consumer internet asset,” Morgan Stanley analysts said in the report. “Its unique, gamified approach to learning allows it to combine the mobile gaming and language learning markets for a $220B [total addressable market], of which it has just [about] 0.5% share.”
Analysts at Morgan Stanley also see potential for the app to earn more, as it currently monetizes at a lower rate than its competitors. Its Gen AI subscription tier Max, which is ad-free and allows users to role-play and have personalized explanations, plays a large role in the bank’s growth projections.
Shares of Duolingo were up about 10% in recent trading, ahead roughly 70% over the past 12 months.
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