UBS thinks Duolingo can find more growth drivers from artificial intelligence and higher pricing for subscriptions. The bank began coverage of the language education stock on Wednesday with a buy rating and a $195 per share price target. UBS’ forecast implies more than 26% upside from Wednesday’s $154.24 close. Analyst Chris Kuntarich said Duolingo is a “best-in-class brand” that has more room to grow before fully penetrating its potential user base — which could be boosted by artificial intelligence. “DUOL has a path to accelerate engagement and payer penetration trends by leaning into GenAI-driven content creation and drive a 29% subscriber CAGR [compound annual growth rate] over the next two years,” Kuntarich said. The analyst also noted optimism on future subscriber monetization through the company’s family plan and “Max” tier, which is double the cost of its Super subscription. “In an upside scenario, we estimate that Family Plans (12% of subs as of FY22E after launching in Aug ’21) and Max subscriptions could account for a combined mid-teens % of net subscribers over the next two years,” Kuntarich said. “We also see room for DUOL to increase prices in its Family Plan and Duolingo English Test and make a case that the Family Plan is 8-38% underpriced as we look at the per-user discount relative to other consumer internet subscriptions.” Duolingo’s stock has been on fire this year, skyrocketing nearly 117%. The company went public in July 2021. In that time, shares are up more than 50%. DUOL YTD mountain Duolingo stock has added more than 116% from the start of the year. — CNBC’s Michael Bloom contributed to this report.
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