Duolingo is poised to bounce back following an effort to refresh its core business and grow more profitable, according to D.A. Davidson. The Pittsburgh-based language learning platform soared more than 350% in 2023-2024, only to plunge 60% in 2025-2026. On Tuesday, Davidson upgraded Duolingo to buy from neutral, lifting its 12-month price target on the stock to $160 from $130, implying 23% upside from Monday's close. "Underlying product work, marketing changes, and the continued efforts at refining the core monetization engine are underappreciated by investors and there is a long runway for growth in the coming years," analyst Wyatt Swanson wrote Tuesday in a note to clients. "We dig into how [daily active users] can continue to accelerate and how bookings may converge with DAU growth." Duolingo is down 26% this year alone as paid subscriber growth has slowed and concerns over artificial intelligence-linked disruptions have cast a shadow over its business. DUOL YTD mountain Shares are down about 26% in 2026. But now there are some signs that the company's turnaround effort in its core business is beginning to bear fruit, D.A. Davidson said. "June 2026 marked an inflection point for DAUs, which we originally attributed largely to Duolingo's streak revival event," Swanson wrote. "However, we've observed July/August DAUs show strength on a higher base of users, with all user cohorts moving higher in recent months." The analyst added that "users who once churned off are now exhibiting strong retention, which suggests that Duolingo's product has improved relative to the past." That retention, in turn, should support efforts to monetize content across Duolingo, ultimately driving more value to the stock. D.A. Davidson's recommendation goes against the Wall Street consensus, where 19 of 25 analysts only rate the stock a hold, according to LSEG data. Duolingo shares are rising about 4% in early trading Tuesday.