On Thursday, Citi reaffirmed its Buy rating on shares of Udemy Inc (NASDAQ:UDMY), maintaining a $22.00 price target. The online learning platform's fourth-quarter results, while solid, were accompanied by an acknowledgment of execution errors and a weaker-than-anticipated outlook for the year 2024. These factors are expected to impact consensus forecasts and investor sentiment.
The firm noted that although the revisions to consensus forecasts might appear significant in percentage terms, the actual difference in consensus earnings may not be substantial. Analysts suggest that there is a risk of the market overemphasizing the short-term shift in trajectory. However, they believe that if Udemy can achieve a reacceleration in Annual Recurring Revenue (ARR) in the second half of the year, it could counteract current concerns.
Additionally, Udemy's announcement of a $100M share buyback program is seen as a potential source of support for both earnings and the share price. The buyback is expected to offer some technical assistance to the stock in the market.
Despite the cautious guidance, Citi's outlook remains positive for long-term investors. The firm anticipates that shares may experience a decline but views the current situation as a potential buying opportunity for those with a longer investment horizon. The emphasis is on the possibility that the current dip in share price could be a chance for investors looking toward the future.
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