Citi Are Buyers on This EdTech Stock, See 100%+ Upside from Current Levels Via Investing.com

Citi analysts told investors in a note on Tuesday that they are a buy on Udemy, projecting upside potential of more than 100% from current levels.

Despite recent challenges, Citi maintains a positive outlook on the EdTech company, pointing to its robust growth in Udemy Business (UB) amid a challenging environment for Enterprise Learning & Development (L&D).

“Udemy and its investors have endured a tough time of late,” the bank wrote. “While the overall growth rate for Udemy Business appears robust in a challenging cyclical environment for Enterprise L&D (the default exit rate for UB-based orientation is still comfortably above 10%, which is not bad compared to peers exposed to Enterprise L&D), ultimately it is overall growth that matters.”

While Citi acknowledged that Udemy has faced some tough times recently, they emphasized that the company’s valuation presents a compelling opportunity.

“We rate the group a Buy with a price target of $20, implying an upside of more than 100% from current levels,” the analysts wrote.

They point out that while Udemy’s topline growth of around 7% for 2024 may seem disappointing, the company is making up for it with accelerating profit and free cash flow targets.

While the investment bank admits that a significant re-rating of the stock is unlikely until there is clear visibility into revenue growth, which may not happen until late 2025, they still believe the stock’s current valuation is extraordinary .

At just 1x current year enterprise value-to-sales (EV/Sales), analysts see this as a “great opportunity” for investors with a 12-month horizon.

Overall, Citi’s take on Udemy is clear: Despite the challenges, the stock offers significant upside potential, making it a strong buy for long-term investors.