What Makes Newly Listed Coursera a Great Stock Pick?

Coursera, Inc. (NYSE: COUR) provides a common platform to learners and educational organizations across the globe. Its online educational content is related to various fields, including project management, business, data and computer science, health, and information technology. With diversified offerings and a large number of registered learners, Coursera’s prospects and investment appeal appear bright.

It is worth mentioning here that Coursera was originally known as Dkandu, Inc. It was founded in 2011 and was listed in 2021. On TipRanks, this Mountain View, CA-based company has a Strong Buy consensus rating based on 10 Buys.

COUR’s average price target is $30.11, suggesting 91.42% upside from the last closing price of $15.73. Year-to-date, shares of COUR have declined 38.41%. Solid prospects and low share price seem to have attracted the attention of hedge funds and corporate insiders.

In the last three months, hedge funds have increased their holding in COUR by 45.9 thousand shares, while corporate insiders have purchased $66.7 thousand worth of COUR stock.

Knowing more about the company will help prospective investors form an opinion on the stock.

Entering the Capital Market Proved Beneficial for Coursera

The company’s initial public offering (IPO) of shares in March-April 2021 was a success. Approximately 15.73 million COUR shares, including 14.66 million by Coursera and 1.07 million by its shareholders, were sold for $33 per share to the public. Net proceeds from the IPO were $452.5 million.

The stock’s first trading day was March 31, 2021. The opening and closing price on the day was $39 (18.2% above the IPO price) and $45 (36.4% increase from the IPO price), respectively. The IPO was completed on April 5, 2021. Coursera has a market capitalization of $2.3 billion.

COUR’s Journey

In April 2022, Coursera delivered better-than-expected bottom-line results for the first quarter of 2022. Revenues increased 36% year-over-year, and the adjusted gross profit in the quarter expanded 58%. The company is slated to announce its second-quarter results on July 27.

In September 2021, the company announced the addition of 54 new enterprise customers from Europe, the Middle East, and Africa (EMEA) region. Back then, Coursera’s Vice-President of EMEA, Anthony Tattersall, said, “We are excited to partner with leading companies across EMEA and bring new innovations to better prepare workers for the new economy.”

Solid Prospects & Projections Underpin COUR’s Growth Story

Many trends, including unequal access to education, falling demand for low-skilled jobs, and rising requirements for digital knowledge, are proving beneficial for online educational content providers. These players are also well-positioned to gain from the rising percentage of people working remotely across nations. The number of jobs requiring digital knowledge is forecast to reach approximately 190 million in 2025, up from only 51 million in 2021.

To address such a huge market, Coursera has partnered with more than 250 educators to offer multiple courses and degrees. It had nearly 102 million learners (a large percentage being women) registered at the end of the first quarter of 2022. Also, its enterprise customers were more than 900 in the quarter.    

For 2022, Coursera forecasts revenues to be within the $538-$546 million range, higher than the $415 million generated in 2021. Revenues in the second quarter are expected to be $128-$132 million versus $102 million in the year-ago quarter. The top-line strength is expected to partially offset the impacts of higher costs and expenses, which remain a concern for the company in the quarters ahead.

A few days ago, Peter Heckmann of DA Davidson reiterated a Buy rating on COUR while lowering the price target to $29 (84.36% upside potential) from $35. Heckmann opined that “much of the company’s revenue streams are counter-cyclical, and likely to perform well in the event of an economic downturn.”

Coursera’s Website Traffic Trend Signals Growth in Q2

Coursera generated approximately 50% of its revenues in the United States in 2021 and 52% in the first quarter of 2022. The TipRanks Website Traffic tool estimates that the top-line momentum will remain strong in the second quarter of 2022.

In the United States, COUR’s website traffic is forecast to have increased 9.26% in the second quarter, compared with the first quarter. Further, the footfall on the company’s website has expanded 74.44% year-to-date versus the previous year.

Key Takeaways for COUR’s Investors

The global addressable market for online learning platforms is huge, with revenues of $56.7 billion predicted for 2022 by Statista. The industry revenue is forecast to increase by 2.61% CAGR to $64.5 billion by 2027. COUR, with its diversified offerings, educators on board, and degrees offered, is likely to benefit. The stock could interest long-term and risk-taking investors.

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