Duolingo downgraded to Sector Weight from Overweight at KeyBanc

KeyBanc downgraded Duolingo (DUOL) to Sector Weight from Overweight without a price target following the earnings report. The firm says its Overweight thesis was predicated on Duolingo’s product initiatives improving user growth and conversion rates. This has not played out, as evidenced by lower than expected Q4 bookings guidance, the analyst tells investors in a research note. KeyBanc believes management’s decision to invest more in teaching effectively may pay off in a higher growth rate in future years, but believes the near-term consequence is a reduction in bookings and EBITDA, which will likely create an overhang on the stock’s valuation multiples.