COUR - Coursera stock soars ~15% after Cantor upgrades following 'solid' Q2 results
2023-07-28 09:55:12 ET
Cantor Fitzgerald upgraded Coursera ( NYSE: COUR ) to Overweight from Neutral following the company's Q2 results which beat analysts estimates.
The firm also raised its 12-month price target on Coursera's shares to $17 from $13.
Coursera stock rose ~14% premarket on Friday following its solid Q2 results and an upbeat outlook. However, Cantor analysts said that while they applaud Coursera raising its full year revenue guidance and reducing its adjusted EBITDA loss outlook, they continue to think that the two are conservative.
The company revised its 2023 revenue outlook to be in the range of $617M to $623M, compared to prior forecast of $600M to $610M provided in April with Q1 results; Consensus $613.01M. Coursera also lowered its full-year adjusted EBITDA loss margin outlook by ~140 bps, which the analysts said strays from management's historical "set it-and-forget-it" approach when it comes to profitability.
The analysts added that this is a notable change, one that they think is mainly due to Coursera starting to realize scale benefits. The company now has ~129M registered learners on its platform and content breadth that continues to grow at a rapid pace.
In addition, the analysts think that Coursera's three-pronged business model is showing it can grow despite the macro environment, as some segments are counter-cyclical and some are cyclical.
With Coursera's degree business starting to pick up steam, consumer segment benefiting from new content and new partners, and enterprise segment comps becoming easier over the next few quarters, the analysts believe there is more upside in shares, which accounts for the stock having been risen ~24% since Q1'23 results on April 27.
For the degree business the analysts think that it is picking up momentum. After three straight quarters of Y/Y revenue decline, the company's degree segment returned to growth (+1% y/y) in Q1, and has now followed that with degree revenue growing 10% Y/Y in Q2'23.
The analysts added that no other business is adding new degrees at a pace as fast as Coursera. The largest player in this arena (by revenue) is 2U ( TWOU ) which has seen its number of degree programs stagnant over prior years, as they think the company focuses mainly on profitability.
However, 2U too is expecting to ramp up its degree program launch cadence over the coming years. Thus, the competition for enrollments is expected to potentially heat up over the next 24 months, according to the analysts.
An Overweight rating at Cantor means that the firm expects a stock's total return to exceed 15% over the next 12 months.
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Coursera stock soars ~15% after Cantor upgrades following 'solid' Q2 results