Shares of Duolingo Inc (DUOL  ) gained last week, after the Pittsburgh-based company reported better-than-expected fourth-quarter results.

Duolingo's 88.4M MAUs (monthly active users) represent around 5% penetration in a market that has about 1.8 billion global language learners, "implying significant secular growth potential ahead," according to JPMorgan.

The Duolingo Analyst: Bryan Smilek initiated coverage of Duolingo with an Overweight rating and price target of $270.

The Duolingo Thesis: The company appears well-positioned to deliver sustainable bookings and revenue CAGR (compounded annual growth rate) of 24% and 27%, respectively, in 2023-2026, Smilek said in the initiation note.

Duolingo is poised for strong user growth, "driven by product optimizations, gamification/socialization, & social-first marketing strategy," the analyst wrote. He added that the company's paid subscribers could double to 12.3 million by 2026.

"We believe premium GenAI-powered features, such as Roleplay & Explain My Answer, support L-T pricing power," Smilek stated. "DUOL leverages a variety of LLM & cloud providers, & we do not expect a meaningful ramp in capex," he further said.

DUOL Price Action: Shares of Duolingo had risen by 2.57% to $219.02 at the time of publication on Monday.