Coursera (COUR) faces growth uncertainty amid enterprise segment challenges and modest margin expansion, Morgan Stanley said in a Thursday research report.

The company's slump in web traffic growth and fading enterprise trends present roadblocks to its growth roadmap, but these factors are already priced into shares, according to the research note.

The company has outperformed the brokerage's SMID software coverage and the broader SMID software group over the past year on stronger growth prospects, a robust consumer services portfolio, and more differentiation, the analysts noted.

Morgan Stanley said it forecast Coursera's consumer segment to gain 4.4% in fiscal 2025 compared with 5.4% year-over-year growth in Q1. It believes Coursera's platform stands to benefit from generative artificial learning content in the near term, but the catalyst could be offset by the declining priority of learning and development budgets in a volatile macro environment.

In the medium-term, Coursera's learning platform is aligned to the secular trends linked to skilling and reskilling, driven by the impact of GenAI on employees and the need to reskill, but uncertainty looms on the future of learning as well as the potential impact from new "AI-first entrants," according to Morgan Stanley

The brokerage said it downgraded Coursera to equalweight from overweight and increased its price target to $11 per share from $10.

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