On Friday, Cantor Fitzgerald adjusted its outlook on Coursera Inc (NYSE: NYSE:COUR), raising the shares target to $22.00 from $21.00 while maintaining an Overweight rating. The firm's decision follows Coursera's performance, which surpassed consensus estimates on key financial metrics.
The analyst cited a robust quarter for Coursera, noting the company's success in exceeding expectations for both revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA). The firm's confidence in Coursera is further bolstered by the increased interest in artificial intelligence (AI)-related content.
The financial institution has slightly adjusted its future revenue and EBITDA forecasts, indicating a 1.1% increase in FY25 revenue predictions and a 0.2% to 1.2% rise in adjusted EBITDA estimates for FY24 and FY25.
Coursera's position in the market is seen as strong due to several factors. The analyst believes that Coursera stands as a fundamental disruptor in an education sector that has traditionally been slow to innovate.
The company's stock is currently trading at a discount compared to its peers, which, combined with a healthy cash balance of $721 million and the absence of debt, suggests a favorable risk-reward scenario for investors.
The revised price target of $22.00 is based on a targeted multiple of 4.0 times the company's estimated 2025 enterprise value to sales (EV/Sales), which is slightly conservative compared to the peer group average of 4.3 times.
The analyst emphasizes the relevance of using 2025 estimates for valuation, given that the year 2024 is more than halfway through. The firm's approach reflects a cautious yet optimistic outlook on Coursera's financial trajectory.
In other recent news, Coursera Inc. demonstrated robust performance in its second quarter of 2024, reporting a revenue increase of 11% year-over-year to $170.3 million. This growth was largely driven by an uptick in international learners and strong enrollment numbers.
Despite a sustained Enterprise Retention rate below 100%, Coursera received positive remarks on its content publication and distribution efforts, and the introduction of Coursera Coach.
Goldman Sachs (NYSE:GS), however, adjusted its outlook on Coursera, reducing the 12-month price target from $10.50 to $9.00, while maintaining a Sell rating. Needham, in contrast, maintained a Buy rating on Coursera, following the company's better-than-expected Q2 results.
Coursera's recent developments also include advancements in its generative AI offerings, with over two million enrollments in its AI catalog, and the launch of a record 16 new professional certificate programs. Looking ahead, Coursera expects Q3 revenue to range between $171 million and $175 million and plans to continue expanding its Degree and Enterprise segments.
InvestingPro Insights
Recent data from InvestingPro provides a deeper dive into Coursera Inc's financial health and market performance. The company's market capitalization stands at $1.16 billion, indicating a significant presence in the e-learning industry. Despite a negative P/E ratio of -10.84, reflecting current unprofitability, Coursera has shown a substantial revenue growth of 19.28% over the last twelve months as of Q1 2024. This growth is a testament to the company's expanding influence and market share in the education technology sector.
InvestingPro Tips highlight several key aspects of Coursera's strategic positioning. Management's aggressive share buyback initiative and the fact that the company holds more cash than debt on its balance sheet are promising signs for investors. Additionally, while the stock has faced a steep decline over the last six months, it has rebounded strongly over the past month with a 14.0% price total return. Analysts predict a return to profitability this year, which, if realized, could further bolster investor confidence.
For those interested in a comprehensive analysis, InvestingPro offers additional tips on Coursera, which can be accessed by subscribing to the service. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 11 additional InvestingPro Tips available, investors can gain an in-depth understanding of Coursera's potential and make informed decisions.
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