Duolingo Stock Advances After JPMorgan Initiates Coverage With ‘Overweight’ Rating

Shares of education technology company Duolingo Inc. (DUOL) gained Monday as JPMorgan initiated coverage of the provider of language-learning products with an “overweight” rating. The investment bank also set a price target on the stock at $270, about 26% above Friday’s closing price.

Analysts Bryan Smilek and Doug Anmuth pointed to Duolingo’s “freemium” business strategy, saying it helps boost subscriber penetration.

They noted that their “bull thesis” about the company was based on several factors, including strong user growth “driven by product optimizations, gamification/socialization, & social-first marketing strategy.” They also predicted the number of paid subscribers would double to 12.3 million by 2026, arguing that demand will jump for non-native speakers learning English.

Smilek and Anmuth added that like so many companies recently, Duolingo is likely to benefit from generative artificial intelligence (AI), which will enhance its products and features while reducing costs.

Duolingo shares, which rose 3% to $220.30 as of about 1:50 p.m. ET Monday, hit an all-time high in December but stumbled this year before bouncing back near the end of last month. They’re up about than 80% in the past year.