Upwork Shares Rise 17% YTD: How Should You Play the Stock?

Upwork UPWK shares have appreciated 17.3% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s appreciation of 30.7%.UPWK shares have also lagged the Zacks Internet - Services industry and peers, including Tencent TCEHY, Marchex MCHX and Shopify SHOP.Over the same timeframe, shares of TCEHY, MCHX and SHOP have returned 35.7%, 38.2% and 45.6%, respectively. The industry has appreciated 22% YTD.  Upwork’s underperformance can be attributed to sluggish top-of-funnel indicators like the number of clients seeking work and Gross Service Volume (GSV) per active client. During the third quarter of fiscal 2024, GSV declined 3.1% year over year to $998 million. Persisting inflation and high interest rates have negatively impacted UPWK’s prospects.Upwork Inc. Price and Consensus Upwork Inc. price-consensus-chart | Upwork Inc. QuoteHowever, a switch in the staffing process of businesses to cost-effective and high quality and development in offline, digital and analog recruitment have driven UPWK’s prospects. UPWK’s AI innovation, as well as strengthening Marketplace and Managed Services offerings, bodes well for investors.Upwork’s Expanding AI-Integrated Portfolio Drives ProspectsUPWK recently enhanced Uma’s, an AI-integrated offering that assists users in automating their tasks, capabilities to improve customer experience and increase client momentum. Uma’s capabilities include enabling professionals to create customized proposal drafts for freelancers and efficiently evaluate candidates for users based on requirements. UPWK launched Uma Integrated Managed Services to scope projects, analyze skill sets and formulate teams of professionals to produce outcomes. The company’s acquisition of Headroom is a tailwind to the topline as Headroom’s integration aids in driving UMA’s AI advancement and development. Further, Upwork announced the acquisition of Objective AI, Inc., to refine and enhance Upwork’s core search and drive multi-modal capabilities for Uma to provide users with images, audio and video content. Upwork’s Work Innovator Research Assistant, built on the GPT-4o-mini model, is a solution to synergize technology with human knowledge by collaborating with Hourglass Collaborative to enhance user experience. Further, Upwork’s expanding clientele is expected to drive prospects by boosting market reach. UPWK’s implementation of automated solutions, including third-party vendors, across the business aids prospects as it aids the company in streamlining operations and focusing on a narrow portfolio with high ROI investments.UPWK partnered with Lettuce, Builderall, Ocoya and TheWordssmith, some emerging tech providers, to provide fully managed projects to users. These projects will be embedded within the customer experience of partners, leading to expanded access to UPWK’s offerings beyond its core platform.UPWK Offers Revised GuidanceFor the fourth quarter of fiscal 2024, Upwork expects revenue to be in the range of $178 million to $183 million and adjusted EBITDA to be in the range of $38 million to $42 million. UPWK also projects non-GAAP earnings to be between 24 cents and 26 cents per share.For fiscal 2024, Upwork expects revenues to be in the range of $756 million to $761 million and adjusted EBITDA to be in the range of $155 million to $159 million. For fiscal 2024, UPWK expects its non-GAAP earnings to be between $1 and $1.02 per share.UPWK’s Earning Estimate Positive in the Near TermThe Zacks Consensus Estimate for Upwork’s fourth-quarter fiscal 2024 earnings is pegged at 23 cents per share, up 21.05% over the past 30 days and indicating growth of 15% year over year.For fiscal 2024, The Zacks Consensus Estimate for Upwork’s earnings is pegged at 89 cents per share, up 11.25% over the past 30 days and indicating 71.15% year-over-year growth.The Zacks Consensus Estimate for Upwork’s fourth-quarter fiscal 2024 revenues is pegged at $181.20 million, indicating a decline of 1.48% year over year.For fiscal 2024, the consensus mark for UPWK’s revenues is currently pegged at $759.04 million, indicating year-over-year growth of 10.14%. UPWK’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 18.14%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.UPWK Shares - How Should You Play the Stock?UPWK has a stretched valuation, as suggested by a Value Score of C.However, the company’s expanding clientele and AI-integrated portfolio bodes well for investors. Upwork currently has a Zacks Rank #2 (Buy), which implies that investors should consider accumulating UPWK shares.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tencent Holding Ltd. (TCEHY): Free Stock Analysis Report Shopify Inc. (SHOP): Free Stock Analysis Report Marchex, Inc. (MCHX): Free Stock Analysis Report Upwork Inc. (UPWK): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks