Shares in Pearson PLC (LSE:PSON) were a rare bright feature in the FTSE 100 with JP Morgan Cazenove (JPM) reinstating coverage of the company today with an overweight rating and a 1010p price target.
The group topped the FTSE 100 risers as the broker said it believes the media group is “walking the walk” and making good progress on delivering on its strategy.
“Its defensive qualities, low risk, good quality and strong earnings momentum suggest that it has the attributes for further outperformance” JPM said in a note published today.
JPM said it believed its view that Pearson’s assets are undervalued is supported by two unsolicited bids from Apollo over the past year, noting the interest of an experienced education investor gives backing to this assessment.
The broker said it believes Pearson is well placed to weather a likely macro slowdown with the majority of its revenues (around 60%) non-discretionary or based on longer term contracts with states/governments.
JPM said it expects the group’s portfolio to deliver mid to single digit organic growth.
The broker also said it sees potential for significant, albeit still difficult to quantify, upside from digital, data, and first party relationships that can be leveraged across a life time of learning.