RBC Capital Sees Sharp Upside In This Work Marketplace

• RBC Capital analyst Brad Erickson initiated Upwork Inc (NASDAQ:UPWK) with a Sector Perform rating, and a price target of $21, implying an upside of 17%.
• The analyst initiated UPWK at Sector Perform, reflecting on balanced views of a large TAM and comprehensive services portfolio offset by rising customer acquisition cost, competitive intensity, and likely abating labor tailwinds.      
• The analyst believes that positively the digital freelance opportunity should easily support double-digit growth ahead, with some near-term negatives well discounted in.
• Less positively, labor's softening, CAC is rising, and LinkedIn represents a meaningful overhang unlikely to go away anytime soon, mentions the analyst.
• Erickson states that the stock is arguably attractive valuation-wise; evidence is needed of an inflection to get more constructive, which appears lower the probability post-COVID.
• Price Action: UPWK shares are trading lower by 2.32% at $17.9 on the last check Monday.