The first broker changes are starting to trickle out for Pearson PLC (LON:PSON), a day after it unveiled the full-scale of the challenges facing it in the US higher education market.
The influential media team at Deutsche Bank has cut its price target for the stock by 130p to 600p. But as this is still 15p higher than the current share price, its has moved its recommednation to 'hold' from 'sell'.
Interestingly, it now thinks the publisher will pay a dividend of 26p next financial year - half the figure it previously distributed.
The company unveiled a cut to the divi as part of its self-help plan without saying just how much it would hack back the income payment.
As part of its refinancing strategy, Pearson did say it was considering plans to sell its stake in the paperbacks group Penguin Random House to further bolster the balance sheet.
“For the past several years Pearson has consistently failed to recognise the depth and range of the challenges it faces, particularly in US college textbooks,” Deutsche said in a note to clients.
“The company has taken some steps to address the problems; cutting the dividend, selling non-core assets, reducing certain prices and investing in the product.
“Although there are no quick fixes, the change of direction is welcome.”
At 10.10am, the shares were little changed at 575.25p each.
On Wednesday City broker Panmure cut its price target back to 650p a share from 870p and dropped its recommendation to ‘hold’ too, while Liberum repeated its 'sell' all the way down to 470p.
Panmure thinks the dividend will fall to 25p a share to provide cover of two-times' earnings.