Pearson looks undervalued even with a mixed segmental performance in the first quarter from the online learning group, according to Shore Capital.
Revenues at the two largest divisions, Assessment & Qualifications (Shore: 41% of total) advanced by 2% against tough comparatives while Higher Education (Shore: 23%) saw a 4% decline.
Virtual Learning (Shore: 19%) also declined by 4% English Language (Shore: 11%) and Workforce Skills (Shore: 6%) increased by 22% and 9% respectively.
Pearson reiterated its previous outlook for the year and allied to a positive long-term outlook for global learning spending points to a three-year EPS and DPS progression accompanied by strong cash generation and debt erased by 2026.
A DCF-derived fair value assessment of 1,271p suggests 28% upside potential with ‘buy’ the recommendation.
Shares eased 1.3% to 979p.