Pearson PLC (LSE:PSON) interim results on 29 July come against a backdrop of downgrades for the competition in the English tuition space.
In particular, rival IDP Education said regulatory changes had affected student volumes.
In the first quarter of 2024, IDP noted that student visa applications were down between 20% and 30% in the UK, Canada and Australia.
UBS now expect IDP English tuition volumes in 2025 to be 26% below volumes in 2023 and for the first five months of 2024 student visa applications to be down 16% across the three countries.
At Pearson, UBS expects its English business to deliver growth nonetheless, by taking market share, price rises and strong growth in institutional revenues.
'Buy' remains the stance despite the challenging market environment for Pearson Test of English (6% of group revenues).
“While we expect H1'24 EBIT to be weak, we do not expect management to downgrade FY24 EBIT guidance.
“We then expect to see an inflection in Pearson organic growth to 5% in 2025, driven by stabilization of market volumes in English, contract wins in A&Q and Virtual Schools, launch of new businesses (e.g., test prep courseware); and easier comps.”