UBS has reaffirmed its 'buy' rating on Pearson PLC (LSE:PSON) and kept its price target at 1,460p, implying nearly 48% upside from the current share price of 988p.
The broker came away from a fireside chat with chief executive Omar Abbosh feeling confident about the company’s near-term performance and longer-term growth prospects.
Trading in the fourth quarter of 2025 is said to be in line with expectations, and management remains comfortable with full-year guidance.
Abbosh highlighted the strength of Pearson’s portfolio model, which has seen weaker performances in some areas, such as Pearson Vue and international higher education courseware, offset by outperformance in others, notably Virtual Schools.
He also hinted that a clearer reporting structure could emerge, helping investors make better sense of the group’s mix of businesses.
Momentum looks set to carry into 2026, particularly in Virtual Schools and Pearson Vue. Abbosh said contract wins at the testing arm would take time to build, as it can be months between securing a deal and seeing volume ramp up. UBS notes that this could offer upside to its current forecast for 4% growth in Pearson Vue next year.
Management continues to target mid-single-digit organic revenue growth through to 2028, though the ambition is to accelerate that rate over time. Much of that depends on expanding the business-to-business (B2B) offering.
Pearson will announce new B2B products developed with Microsoft at the upcoming Microsoft Ignite conference, designed to help employees build skills through feedback integrated into tools such as Teams.
Artificial intelligence was another theme of the discussion. Abbosh said Pearson’s assessment operations stand to gain as more exam owners seek partners able to evaluate specific skills and knowledge using AI tools.
In courseware, Pearson has moved away from being a traditional publisher and now distributes both first- and third-party content across multiple platforms, meaning it can benefit from innovation elsewhere in the education ecosystem.
Abbosh also spoke about cultural change at Pearson, including greater use of data and analytics in sales and marketing. He pointed to the strong digital marketing performance behind the recent growth in Virtual School enrolments as evidence that the shift is working.
UBS expects Pearson’s fourth-quarter update to show 8% underlying growth and for management to guide to around 5% organic growth in 2026.
While the broker sees potential for a stronger outcome, it does not expect the company to signal that yet.
UBS has raised its earnings per share forecasts by 1% to reflect foreign exchange benefits and believes the shares, trading on roughly 11 times expected 2028 earnings, remain attractively valued.