Upwork (UPWK) is investing in integrating its enterprise-level clients subsidiary, Lifted, into its platform in H1, and initial investments are substantial, occurring at once, which has pushed the company's Q1 guidance down and represents a more pronounced enterprise transition, RBC Capital Markets said in a note Tuesday.

"Lifted integration expected to kick in 2H; initial investments are a little chunky," the note said.

The brokerage noted that the company's expectations of 25% growth in gross services volume in fiscal year 2026 look skeptical, given its past execution challenges, and said that they are "looking for confidence in return to double-digit growth before we can get more constructive with our rating".

Upwork is also facing challenges as AI affects average selling prices and transaction volumes, which contribute to a pessimistic investment perspective, the note said.

RBC Capital Markets reiterated its sector perform rating on the stock and lowered its price target to $20 from $24.

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