Citi cuts Upwork price target to $18, maintains neutral rating

On Tuesday, Citi analysts adjusted their outlook on Upwork Inc. (NASDAQ:UPWK), reducing the price target on the company’s shares from $19.00 to $18.00, while reiterating a Neutral stance. The revision follows Upwork’s first-quarter earnings, which surpassed analyst expectations, and an increase in the company’s 2025 EBITDA forecast. According to InvestingPro analysis, Upwork appears undervalued at its current market cap of $1.77 billion, with a P/E ratio of just 8.47x and strong financial health metrics.

Upwork reported a Gross Services Volume (GSV) of $988 million, a slight decline of 2% year-over-year but still 1.5% higher than the consensus. The company’s revenue for the quarter was $193 million, marking a 1% year-over-year increase and coming in 2% above expectations. Notably, EBITDA reached $56 million, translating to a 29.1% margin, which was 16% higher than anticipated. InvestingPro data reveals impressive gross profit margins of 77.41% and a healthy current ratio of 3.39, indicating strong operational efficiency and liquidity. Subscribers can access 10+ additional ProTips and comprehensive financial metrics.

The firm acknowledged that while the trailing twelve-month active client growth continues to show a downward trend, there were positive signs, such as GSV per active client growing for the first time in a year and a half. This growth was partly attributed to a 25% year-over-year increase in AI-related GSV, improvements in search and recommendations, and a shift towards serving higher-value clients, with GSV per large client up by 11% year-over-year.

Despite the positive aspects of the quarterly results, Citi analysts expressed caution due to the ongoing macroeconomic factors that could affect the company’s performance. They noted that these factors continue to obscure the business’s outlook, leading to a maintained Neutral/High Risk rating for Upwork’s stock.

Following the announcement of the quarterly results and the updated EBITDA guidance, Upwork’s shares experienced an approximate 11.5% rise in after-hours trading. The company’s performance and updated forecasts have drawn attention to its resilience amid a challenging economic landscape. With revenue growth of 11.64% over the last twelve months and strong cash flows, InvestingPro’s detailed research report offers valuable insights into Upwork’s growth trajectory and market position among 1,400+ top US stocks.

In other recent news, Upwork Inc. reported a record revenue of $192.7 million for the first quarter of 2025, reflecting a 1% year-over-year increase. The company’s earnings per share and revenue exceeded market expectations, leading to positive market reactions. Upwork’s gross margin also reached an all-time high of 78.3%, and the company reported a significant 105% increase in GAAP net income year-over-year. The strong performance is attributed to the successful launch of the Ooma (NYSE:OOMA) AI platform, which has enhanced user engagement. For the full year 2025, Upwork has set its revenue guidance between $740 million and $760 million, with adjusted EBITDA expected to range from $190 million to $200 million. Analyst firms have noted the company’s strategic focus on AI and enterprise strategies as key growth drivers. Upwork’s leadership has emphasized its role in integrating AI with human work, positioning the company as a critical infrastructure in this evolving landscape. The company remains optimistic about its growth trajectory, expecting revenue reacceleration in 2026.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.