RBC Capital Sees Sharp Upside In This Work Marketplace

RBC Capital analyst Brad Erickson initiated Upwork Inc UPWK with a Sector Perform rating, and a price target of $21, implying an upside of 17%.
The analyst initiated UPWK at Sector Perform, reflecting on balanced views of a large TAM and comprehensive services portfolio offset by rising customer acquisition cost, competitive intensity, and likely abating labor tailwinds.
The analyst believes that positively the digital freelance opportunity should easily support double-digit growth ahead, with some near-term negatives well discounted in.
Less positively, labor's softening, CAC is rising, and LinkedIn represents a meaningful overhang unlikely to go away anytime soon, mentions the analyst.
Erickson states that the stock is arguably attractive valuation-wise; evidence is needed of an inflection to get more constructive, which appears lower the probability post-COVID.
Price Action: UPWK shares are trading lower by 2.32% at $17.9 on the last check Monday.

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