Analysts at City broker Shore Capital have downgraded FTSE 100 publishing and education firm Pearson PLC (LON:PSON) to ‘hold’ from ‘buy’ on valuation grounds following a recent share price rally.
The broker said that since it had upgraded the group to ‘buy’ on 17 October, the share price had risen around 17% and outperformed the market by 7% over a one-month view.
READ: Pearson revenue flat in 9-month trading update, still sees underlying profit growth
Following the appreciation, Shore’s analysts said the stock now “looks up with events – potentially creating a profit-taking opportunity” and had therefore moved the share rating back to ‘hold’ with a 952p price target.
The rally was sparked last month after Pearson released a nine-month trading update that said total revenue had been flat year-on-year but it remained on track to return to underlying full-year profit growth.
Of its flat total sales, the company said that a 3% decline in US Higher Education Courseware was offset by the rest of the company growing in aggregate.
Pearson still expects 2018 adjusted operating profit in the range of £520mln to £560mln, with 2018 adjusted per-share earnings in the range of 68p to 72p as a result of one-off tax benefits and a resulting lower finance charge.
In lunchtime trading Friday, Pearson shares were down 1.7% at 935.6p.