What happened
Shares of Upwork (UPWK 0.90%) are up 9.6% in afternoon trading as of 2:15 p.m. EDT, after the freelancing facilitator received a pair of bullish endorsements on Wall Street.
This morning, Jefferies & Co. announced it is raising Upwork's price target 20% from $15 to $18 a share, reports StreetInsider.com. The stock had already passed $15 in Friday trading, so Jefferies may have felt compelled to raise its target to support its existing buy rating on the stock -- even at the risk of potentially getting caught wrong-footed when Upwork reports earnings tomorrow.
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So what
Taking a more cautious stance is RBC Capital. Consensus estimates call for Upwork to report a $0.09-per-share loss in tomorrow's Q2 report, on sales of $80.3 million.
In a note released over the weekend, RBC suggested that these numbers are reasonable and that the company might do even better in Q3, cutting its loss to perhaps $0.07 per share or less, and with sales growing past $85 million, buoyed by "elevated job postings and record high client engagements."
Now what
Longer term, RBC thinks Upwork has a bright future based on its "strong gross margins (71%), and robust, sustainable Revenue growth of 20%+." Despite this, with the stock up 40% year to date, RBC worries that the stock's valuation may be looking a bit stretched in the short term.
Despite rating Upwork shares a buy, RBC still values the stock at no more than $14 -- 15% below where the shares trade today.
