Upwork Shares Tumble Despite Revenue Beat: 3 Analysts React To Earnings Call Insights

Shares of Upwork Inc UPWK tanked in the premarket on Thursday, despite the company reporting upbeat quarterly revenues. Here are some key analyst takeaways from the earnings call.

RBC Capital Markets On Upwork

Analyst Brad Erickson reiterated a Sector Perform rating, while reducing the price target from $14 to $8.

Although Upwork’s results were marginally ahead of expectations, “enterprise weakness (no, not ChatGPT) drove a disappointing guide which is tough timing given the generative AI (GAI) controversy lately,” Erickson said in a note.

“Positively, the company's pricing should be a volume tailwind later this year and the cost cuts will drive up Street EBITDA ests,” the analyst wrote. “Less positively though, the enterprise business isn't finding a fit which was central to the bull case and digital staffing is proving every bit as cyclical as feared,” he added.

Check out other analyst stock ratings.

Needham On Upwork

Analyst Bernie McTernan maintained a Buy rating, while slashing the price target from $18 to $11.

Upwork’s revenue growth continued to decelerate, from 18% in the fourth quarter of 2022 to 14% in the first quarter of 2023, “and we assume a further slow down to +4% growth in 2Q23,” McTernan said.

Upwork faces a “more uncertain growth outlook,” as it navigates a challenging macro environment and an evolving AI landscape, the analyst stated. “While waiting for the macro to turn, UPWK is right sizing its cost structure with $80M of annualized cost savings, half of which should hit in '23E, including curtailing brand marketing spend,” he added.

JMP Securities On Upwork

Analyst Andrew Boone reaffirmed a Market Outperform rating, while reducing the price target from $17 to $14.

The company lowered its 2003 revenue guidance by 5%, “with the majority of the reduction due to enterprise weakness,” Boone wrote in a note.

“Importantly, we note the company is not seeing AI impact any specific categories while AI overall is proving to be incremental to demand,” the analyst stated. The performance appears to be “closer to the bottom of this cycle than the top and we expect freelancing to lead the recovery,” he added.

UPWK Price Action: Shares of Upwork tanked 19.66% to $6.54 in the premarket session, then bounced 2.2% to $8.32 at the time of publication on Thursday.

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