Pearson PLC (LSE:PSON), the London-listed educational publishing house with a market cap of more than £5.5bn, is due to release its interim results for the first half of 2022 on Monday.
The broker consensus is that the educational and textbook publisher will outperform the market. Pearson is forecast to post annual turnover of £3.7bn in 2022, up from the £3.4bn it generated in 2021, and to beat last year’s pre-tax profit this year.
Last week, Morgan Stanley (NYSE:MS) raised its price target for the publisher to 800p, up from 750p, whilst retaining an 'equal weight' rating.
This followed Deutsche Bank's re-rating of the publishing house as a ‘buy’ this June after several “painful” years, lifting its target price to 900p from 625p.
The publishing industry was hit by temporary bookstore closures during the pandemic but simultaneously benefited from a surge in online sales particularly of classic literature.
Deutsche Bank predicts that Pearson's revenues will grow at a compound rate of 5% a year between 2021 and 2025, with operating margins due to lift from 11% to 15% in this time, though its share price is below historical averages. On Friday, the publisher's shares were trading at around 753p per share.
Analysts remain split between whether to buy or hold shares in the publisher, with five analysts weighted one side or the other, and one recommending selling its shares.
Pearson said on Friday that it had appointed Graeme Pitkethly to replace former deputy chair and senior independent director Tim Score as chair of the audit committee. Annette Thomas will sit on its remuneration committee from August.
Pearson measures well on the Piotroski F score of financial health, scoring a measure of 8. In terms of bankruptcy risk, it is categorised as "safer" with a measure of 3.6 on the Altman-Z score.