Pearson has received a hefty target price and investment stance upgrade, with Deutsche Bank now rating the online learning specialist as a buy after several ‘painful’ years.
“After a period of decline driven by structural issues in the US courseware market, we think Pearson is now back on the path to sustainable growth as it recaptures the second-hand textbook market and innovates its offering.”
Revenues should grow by 5% a year compound over 2021-25 with operating margins to expand from 11% to 15%.
Shares, though, are rated below both historical averages and rivals and with a 3% dividend yield and 4.5% buyback yield, Deutsche bank has raised its target price to 900p from 625p.