On Thursday, BofA Securities initiated coverage on shares of Coursera Inc (NYSE:COUR), an online learning platform, with a Buy rating and set a price target of $11.00. The firm sees a 44% upside potential for the stock, which is currently traded on the New York Stock Exchange.
Coursera, known for its wide array of free and paid educational content, partners with over 325 leading global universities and industry players, ranging from Yale University to tech giant Google (NASDAQ:GOOGL). The platform is distinguished by its offering of certifications and degrees from accredited institutions, which BofA Securities believes adds significant value for students, especially in a competitive job market.
The firm also highlighted Coursera's strategic shift towards more proprietary content, which could strengthen the platform's unique offerings through exclusive courses and potentially improve revenue share outcomes. This move is seen as a way for Coursera to bolster its defenses in the online education sector, which includes competitors like Udemy that offer non-degree courses.
BofA Securities expressed a positive outlook on Coursera's long-term growth prospects. The firm anticipates that as the need for upskilling and reskilling grows in the labor market, Coursera's platform will meet the increasing demand for accessible and recognized educational programs.
In other recent news, Coursera Inc. has demonstrated strong performance in its recent earnings, surpassing consensus estimates on key financial metrics. The company's second quarter revenue rose by 11% year-over-year to $170.3 million, primarily driven by an increase in international learners and robust enrollment numbers.
In response, Cantor Fitzgerald raised its shares target for Coursera from $21.00 to $22.00, maintaining an Overweight rating. The firm's decision was also influenced by Coursera's success in exceeding expectations for both revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA).
Contrarily, Goldman Sachs adjusted its outlook on Coursera, reducing the 12-month price target from $10.50 to $9.00, while maintaining a Sell rating. The firm cited unanswered questions regarding the adoption and impact of generative AI in enterprise environments as a reason for the adjustment. Meanwhile, Needham maintained a Buy rating on Coursera, following the company's better-than-expected Q2 results.
Coursera's recent developments 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
As BofA Securities shines a spotlight on Coursera Inc's potential, real-time data and insights from InvestingPro complement the analysis. With a market capitalization of approximately $1.2 billion, Coursera is navigating the competitive online education landscape with notable strategic moves.
One such move is the company's aggressive share buyback program, as highlighted in InvestingPro Tips, signaling management's confidence in the company's value. Moreover, Coursera holds more cash than debt on its balance sheet, providing financial stability and flexibility in its operations.
InvestingPro Data underscores Coursera's revenue growth over the last twelve months as of Q2 2024, with an impressive 16.19% increase. This growth trajectory is complemented by a healthy gross profit margin of 52.3%, showcasing the company's ability to maintain profitability in its core operations.
Despite these strong financials, it's important to note that Coursera has not been profitable over the last twelve months, reflected in its negative P/E ratio of -12.43. Yet, analysts predict that the company will turn profitable this year, which could be a pivotal point for investors considering the stock.
For those looking for more in-depth analysis, there are additional InvestingPro Tips available for Coursera, offering a comprehensive look at the company's financial health and market position. With a fair value estimate by analysts at $15, and InvestingPro's own fair value calculation at $10.93, investors have a range of perspectives to consider when evaluating Coursera's stock potential.
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