UBS has revised its earnings projections for Pearson PLC (LSE:PSON), signalling caution as the global education provider’s first-half earnings approaches.
The investment bank trimmed its forecast for Pearson’s 2024 earnings per share by 2%, attributing the downturn to disappointing English language testing volumes and legislative changes in Australia that may hinder international student flows.
A significant downturn in UK visa applications — down 15% following new restrictions on dependents — has compelled UBS to adjust Pearson’s expected revenue growth in the English segment from 15% to just 7%.
Moreover, the bank anticipates a slight decline in US higher education enrollments for fall 2024, influenced by macroeconomic factors like lower unemployment rates and higher interest rates.
UBS predicts a 5% decrease in EBIT to £237 million year-over-year.
The forthcoming strategic update from Pearson's new chief executive is also on the radar, potentially setting new medium-term business targets.
UBS maintains a buy rating on the stock, though, forecasting a rebound in organic growth by 2025 driven by more favourable comparisons in the English and Assessment & Qualifications segments.