On Wednesday, BMO (TSX:BMO) Capital Markets adjusted its financial outlook for Coursera Inc (NYSE: NYSE:COUR) shares, reducing the price target from $20.00 to $13.00. The firm maintained its Outperform rating on the stock of the online education provider.
The reevaluation of Coursera's stock value follows the company's first-quarter 2024 results, which revealed a downturn in the Consumer segment. According to the company's management, this segment experienced a decline in North American paid learners, both in terms of volume and conversion rates. Additionally, a delay in the launch of a program contributed to the weaker performance.
Despite the challenges in the Consumer division, Coursera's Enterprise and Degrees segments performed in line with expectations and remained aligned with the previously issued full-year guidance. This suggests that while one area of the business is underperforming, other segments continue to meet targets.
The revised outlook for 2024 by Coursera's management, which accounts for the underperformance in the Consumer segment, prompted BMO Capital to adjust its estimates and target price for the company's stock. The firm notes, however, that Coursera is in a relatively strong cash position when compared to many of its publicly-held competitors, indicating a degree of financial stability despite the current challenges.
The decrease in Coursera's price target reflects the immediate impact of the company's revised consumer outlook on its valuation. BMO Capital's continued Outperform rating suggests that, despite the reduced expectations, the firm still sees potential in Coursera's stock performance going forward.
InvestingPro Insights
In light of BMO Capital Markets' recent adjustment of Coursera Inc's (NYSE: COUR) stock price target, insights from InvestingPro reveal additional factors that may influence investor decisions. The company's aggressive share buyback strategy, as noted in one of the InvestingPro Tips, indicates a management team confident in the company's value. Furthermore, Coursera's strong liquidity position, with more cash than debt on its balance sheet and liquid assets surpassing short-term obligations, provides a cushion against market volatility.
InvestingPro Data points to a mixed financial landscape for Coursera. Despite a negative P/E ratio of -17.19, reflecting challenges in profitability, the company has experienced a notable revenue growth of 19.28% over the last twelve months as of Q1 2024. This growth is a positive sign for potential recovery and future profitability, aligning with analyst predictions that the company will be profitable this year. Additionally, the stock's current trading near its 52-week low could present a buying opportunity for long-term investors, particularly as the RSI suggests the stock is in oversold territory.
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