Pearson PLC (LSE:PSON) may have had a soft quarter in Higher Education, but UBS thinks the real story is the acceleration of the market itself.
After a flat Q3 last year, the analysts estimate US Higher Ed grew about 6% in Q3 2025, helped by a strong showing from McGraw Hill and steady progress at Cengage.
In a sector that has spent years fighting enrolment declines and digital disruption, that return to growth is notable.
Pearson, though, did not fully share in the upswing. Its Higher Ed revenues slipped 1% in the quarter, dragged down by weakness in International. In the US, sales rose 2%, but this was muted by a transition in K12, where the sales team is being brought back in-house.
Strip that away and UBS reckons Pearson’s US Higher Ed business probably grew nearer 3–4%, roughly in line with Cengage.
McGraw Hill was the standout. Its Higher Ed sales rose 14% in the quarter, despite tough comparisons, with management attributing most of the improvement to market share gains rather than just better enrolment data.
Cengage delivered 2.5% growth in adjusted cash revenues and continues to lean into product investment, including AI tools.
UBS accepts that Pearson has lost some ground this year but argues the picture could change. The analysts assume only modest growth in 2025, forecasting 2%, and do not build in market share gains.
But they see upside if Pearson’s investment in product and sales helps stabilise its position as the market expands.
Early signs elsewhere in the business, such as growth in Virtual Schools and the launch of the Communication Coach product for integration into M365, support that view.
With the shares trading at 14 times 2026 earnings and UBS’s DCF-based price target steady at £14.60, the bank keeps its Buy rating, suggesting that in a recovering market Pearson’s lag may prove temporary.