Wells Fargo Initiates Duolingo (DUOL) with an Underweight Rating, $239 PT

Duolingo Inc. (NASDAQ:DUOL) is one of the best up and coming stocks with huge upside potential. On September 8, Wells Fargo initiated coverage of Duolingo with an Underweight rating and $239 price target. The firm believes Duolingo’s user growth issues will persist in the medium term, and also believes that the company’s 2027 estimates have downside risk.

The company announced a strong performance, with sales increasing to $252 million from $178 million year-over-year, and net income growing to $45 million from $24 million in the same period. Duolingo reported an EPS of $0.91, which exceeded the expected $0.55.

Luis von Ahn, the Co-Founder and CEO, emphasized the achievement of record profitability and strong top-line growth, along with solid performance across all subscription tiers. Due to this strong performance, the company is once again raising its full-year guidance. Duolingo is now investing in both its core business and exciting new areas like Chess, Math, and Music, which are expected to drive long-term growth.

Duolingo Inc. (NASDAQ:DUOL) operates as a mobile learning platform in the US, the UK, and internationally. The company offers courses in 40 different languages through its Duolingo app.

While we acknowledge the potential of DUOL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.