Upwork Has Assets In Place For Huge Market, Needham Says

Although Upwork Inc UPWK has an industry-leading Gross Services Volume (GSV) of $2.5 billion, it is only “scratching the surface” of a total addressable market that is estimated at a whopping $1.3 trillion, according to Needham.

The Upwork Analyst: Bernie McTernan initiated coverage of Upwork with a Buy rating and a price target of $57.

The Upwork Thesis: It is still early days in the digitalization of the freelance marketplace and of embracing virtual talent, McTernan said in the initiation note.

“Realigning the sales force in '20 was a recent step to help unlock the Enterprise opportunity, a key initiative for UPWK. While Enterprise will only contribute ~7% to total revenue in '21E, we expect it to grow fast, forecasting a 42% CAGR through '25E, growing to 14% of revenue,” the analyst wrote.

“There are 1,600 (and likely growing) businesses with the target customer profile for Enterprise currently spending in their Marketplace to add to its 200+ Enterprise clients as of June. In our base case we assume UPWK has 600 Enterprise clients in '25E and 1,200 in our bull case,” he noted.

UPWK Price Action: Shares of Upwork had risen by 5.74% to $46.51 at the time of publication Thursday morning.

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