Udemy Stock: Citi Analysts Predict Over 100% Upside Potential - Here’s Why You Should Pay Attention
In a recent note, Citi analysts have strongly recommended Udemy (NASDAQ: UDMY) to investors, projecting a staggering potential upside of over 100% from its current trading levels. Despite facing some recent hurdles, Citi maintains an optimistic outlook on this EdTech giant, particularly highlighting the impressive growth of its Udemy Business (UB) segment even in a challenging environment for Enterprise Learning & Development (L&D).
"Udemy and its investors have endured a tough time of late," the analysts remarked. "However, the overall growth rate for Udemy Business remains robust, showing a clear resilience in a cyclically challenged Enterprise L&D market. This robust growth, with an implied exit rate comfortably above 10%, stands out when compared to its peers."
Citi acknowledges the recent struggles but underscores that Udemy's current valuation is a compelling opportunity for investors. "We rate the group as a Buy with a $20 price target, implying comfortably 100%+ upside from current levels," they wrote.
Although the projected topline growth for 2024 is around 7% and may seem modest, Udemy is compensating by fast-tracking its profit and free cash flow targets. While a significant rerating of the stock might not occur until there's evident revenue growth—potentially not until late 2025—Citi analysts still view the present valuation as extraordinary.
Trading at just 1x current year enterprise value-to-sales (EV/Sales), Citi describes this as a "great opportunity" for investors with a 12-month investment horizon.
Analysis: What This Means for You and Your Finances
To break it down, here's what this all means in simpler terms:
- Current Situation: Udemy, an online learning platform, has had a rough patch recently.
- Citi's View: Despite this, analysts from Citi believe the company’s potential for growth is strong, particularly in its business-focused segment (Udemy Business).
- Valuation: The stock is seen as undervalued right now, making it a potentially smart buy.
- Future Growth: While revenue growth might not be obvious until late 2025, the company is improving its profits and cash flow in the meantime.
- Investment Opportunity: Citi suggests that buying Udemy shares now could lead to substantial returns, projecting the stock price could more than double.
For you, this means that if you're looking to invest in the stock market with a long-term perspective, Udemy could be a valuable addition to your portfolio, especially given its current low valuation and the high growth potential cited by Citi.