One of the pandemic darlings that has certainly taken a hit in recent years is Coursera (NYSE:COUR). Unfortunately, investors continue to see selling pressure materialize in this company, with shares of COUR stock dropping another 10% in today’s session alone.
This move appears to be a direct result of a key downgrade from Goldman Sachs today. Analysts downgraded the stock to a “sell” rating from “neutral,” slashing their price target from $18 to $14 per share. Accordingly, today’s decline has brought Coursera into this range, with the stock now trading below the previous $18 price target.
Let’s dive into what’s behind this downgrade — and what investors may want to make of Coursera moving forward.
COUR Stock Plunges on Analyst Downgrade
Of course, any sort of analyst downgrade is unlikely to be perceived positively by the market. For a company with significant downside momentum, the effects of a key downgrade from analysts at a prestigious investment bank can be even more exaggerated.
Thus, today’s price action around Coursera can be viewed as understandable, with some long-term investors simply looking elsewhere for value and growth amid the current market. Many of the key tailwinds that drove COUR stock higher in the past have dissipated, with investors bemoaning deteriorating fundamentals. Accordingly, when analysts jump on board this negative narrative, it’s only natural to assume that many investors may not want to stick around to see how things play out.
The key reason for this downgrade appears to be tied to a “lack of visibility” around enterprise spending. The recovery Coursera’s management team has pointed to may not materialize as quickly as expected, or to the degree many had initially thought. That’s concerning, as enterprise clients make up a significant portion of Coursera’s revenue and earnings stream.
Accordingly, I do think Coursera is one to be cautious about right now. Today’s market reaction may be overdone and perhaps there’s some hidden value to be seen with this company, if its turnaround efforts materialize. But if Goldman Sachs is right and COUR stock drops to $14 per share, that’s another potential 20%-plus downside for investors to consider.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
