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3 Reasons Why the Bulls May be Targeting Coursera (COUR)

Barchart - Fri Mar 10, 2023

At first glance, open online course provider Coursera (COUR) does not appear a viable upside opportunity. Since the start of the new year, COUR stock dropped 5% of equity value. In contrast, the benchmark S&P 500 gained almost 2.5% during the same period despite encountering significant headwinds. In the trailing year, the situation is even worse, with Coursera shares cratering over 34%.

In many ways, the erosion of COUR stock appears brutally unfair. Making its public market debut in April 2021, the world was still struggling heavily with the ravages of COVID-19. Inherently, the pandemic disrupted both the academic and professional ecosystems. But on a cynical level, Coursera enabled people to keep their skills fresh and relevant during the downtime. Unfortunately, the market didn’t care.

However, it’s possible that the winds may be shifting more favorably for Coursera. For one thing, the company delivered a relatively decent earnings performance for the fourth quarter. According to Zacks Equity Research, the company “came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of a loss of $0.12. This compares to loss of $0.17 per share a year ago. These figures are adjusted for non-recurring items.”

Notably, over the last four quarters, Coursera surpassed the consensus earning per share estimate three times. Further, the education provider generated revenue of $142.18 million for the quarter ended December 2022. This tally surpassed analysts’ consensus target by 3.25%. Further, the metric compared favorably to the year-ago revenue haul of $114.96 million.

In addition, following the close of the March 9 session, COUR stock represented one of the highlights of Barchart.com’s screener for unusual stock options volume. Specifically, total volume for COUR reached 9,523 contracts against an open interest reading of 18,948. As well, the delta between the Thursday session volume and the trailing one-month average volume came out to 513.99%.

Most notably, call volume hit 9,389 contracts while put volume managed to ring up only 134 contracts. This led to a put/call volume ratio of 0.01, on paper dramatically favoring the bulls. Below are three other reasons why Coursera could be tempting for the gambler.

COUR Stock Benefits From a Competitive Job Market

Throughout the new normal, we’ve increasingly heard stories about the labor market’s power spectrum favoring employees over employers. Especially, with remote work becoming a widespread trend throughout the worst of the pandemic, it became only natural that worker bees would demand this perk be implemented permanently.\

However, with the economy suffering from blisteringly high interest rates, several companies – and not just in the U.S. – announced mass layoffs. Almost certainly, this dynamic tips power back in favor of employers. As the pink slips start to remove people from their paychecks (first for the underperformers, then for the tangible contributors), it’s not enough to just show up.

In other words, folks need to start shoring up their skills or learn new, relevant ones to stay competitive in an arena likely to become more cutthroat. That’s where Coursera could come into the picture, delivering much-needed coursework for hungry job seekers. Over time, this may reverse the bad luck that COUR stock endured since its debut.

Acclimatization to the New Normal

Prior to the COVID-19 pandemic, hesitation generally existed regarding the viability of online academic and professional certification programs. For example, without in-classroom teaching, it may be much more challenging to convey certain lessons. As well, the accountability factor (or lack thereof) may have in the minds of some employers diminished the legitimacy of online courses.

However, the COVID-19 crisis changed this narrative dramatically. Today, no one would bat an eye about academic courses conducted online, nor would they question a prospective employee’s remote-work experience (seeing as how most white-collar workers have the same experience during the early years of COVID). Therefore, the timing for Coursera’s reemergence is ideal.

Even if the vast majority of corporate employees are recalled back to the office, the concept that remote operations can be viable has already been ingrained into society. Therefore, COUR stock may have cleared a significant hurdle, making it attractive to contrarian thinkers.

Strong Analyst Support

In all fairness, even the bulls of COUR stock must acknowledge that the underlying opportunity carries significant risks. On a financial level, the lack of profitability – especially during a period of rising interest rates – may dissuade conservative investors. Also, the Barchart Technical Opinion rating pings COUR as a 72% sell. Obviously, that’s not a great confidence booster.

However, Barchart also notes that in the current month, COUR stock benefits from a consensus moderate buy view. This breaks down to six strong buys, two moderate buys and five holds.

Interestingly, TipRanks notes that within the past three months, COUR stock commands a consensus view of strong buy. Under this recent framework, six analysts have buy ratings while only two have hold ratings, with zero sells. Perhaps most enticingly, their average price target stands at $19, implying 62% upside potential.



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On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.