Duolingo's (DUOL) Q2 bookings are expected to beat current estimates, while Q3 bookings growth is expected at 9%, broadly matching market expectations, BofA Securities said in a note Tuesday.
Duolingo is scheduled to report its Q2 results on Wednesday.
The investment firm said Duolingo trades at a large premium to similar subscription companies even though their expected profit growth is broadly comparable and that it cannot yet judge whether users will accept Duolingo's planned move toward voice-based learning and a more human-like digital tutor.
The company's stronger user growth in June may not last because it appeared linked to a free Super subscription offer with Airbnb (ABNB) rather than major product improvements, according to the note.
The firm said it has little support for 2027 acceleration and the company's valuation is high for long-term growth story.
BofA downgraded the stock to underperform from neutral and cut its price target to $93 from $103, lowering its 2027 bookings growth forecast to 9% from 11%.
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