Canaccord Genuity has reduced its price target on Udemy Inc (NASDAQ:UDMY) to $5.00, down from $7.00, while leaving its rating on the online learning company at Hold. The move follows recent company developments that include a narrowly better-than-expected fourth quarter and a pending all-stock merger with Coursera.
Udemy's shares are trading close to their 52-week low of $4.52 and have fallen about 33% over the past six months. InvestingPro analysis cited in recent reports suggests that, at current market levels, Udemy could be undervalued. Canaccord's adjustment to its target price, however, reflects its current view of the company's near-term public-market valuation.
Financial results for the fourth quarter showed modest upside versus expectations on both the top line and operating profitability. Subscription revenue represented more than three-quarters of Udemy's total revenue for the period. The company continues to report strong gross profit margins - 65.63% in the quarter - although its reported price-to-earnings multiple remains elevated at 182.58.
Udemy described progress in expanding its enterprise-focused offerings. The company highlighted AI-related course content and the introduction of new products such as custom role play simulations intended to help corporate customers create more tailored learning experiences for employees.
Management did not hold an investor earnings call nor provide forward guidance alongside the release of quarterly results. The company cited its pending transaction with Coursera - announced in December - as the reason for withholding guidance. The merger is currently expected to close in the second half of 2026, according to statements from advisors and the company.
Analysts at Canaccord note that the merged business is projected to achieve a materially improved adjusted EBITDA margin - closer to 20% - driven by cost synergies and by reallocating investment dollars into more effective product development and go-to-market activities.
Following the merger announcement, market reactions have included analyst re-ratings: KeyBanc Capital Markets downgraded Udemy from Overweight to Sector Weight. Canaccord's Hold stance was accompanied by the lowered price target to $5 from $7.
As part of the transaction-related actions, Udemy entered an acceleration agreement with CEO Hugo Sarrazin intended to limit potential tax exposure arising from the merger. That agreement advances a portion of the CEO's 2025 bonus and immediately vests certain restricted stock units.
The merger terms specify that each Udemy share will be exchanged for 0.800 shares of Coursera common stock, an exchange ratio described as representing a roughly 26% premium based on recent average closing prices. Post-closing ownership is structured so that Coursera shareholders would own approximately 59% of the combined company. The transaction implies a combined valuation of about $2.5 billion.
Udemy also disclosed a strategic commercial arrangement to expand into Korea's corporate learning market through a partnership with LG CNS. The collaboration is built around LG CNS's distribution capabilities and is intended to bring Udemy's AI-driven learning platform to Korean enterprises and professionals.
Context and implications
The combination of a lower analyst price target and continued operational developments frames Udemy's near-term public-market outlook. The company's subscription-heavy revenue mix and relatively strong gross margins point to structural strengths in its content and platform economics, while the elevated P/E and sliding share price highlight market skepticism about near-term earnings growth and valuation.
Udemy's decision to withhold guidance because of the pending merger places more emphasis on transaction-related metrics and synergies as the primary lens for valuation until the deal closes. Canaccord's projection that the combined business could reach an adjusted EBITDA margin nearer 20% reflects expectations for cost rationalization and more targeted investment, but that outcome remains contingent on integration execution and regulatory timing.
Investors and market participants will likely watch for additional transaction milestones and any updated commentary on integration plans, cost-savings estimates and product investment priorities as the companies move toward the anticipated second half 2026 close.