Pearson PLC (LSE:PSON) “ticks many boxes in 2022” said analysts at Barclays, which kept its equal weight rating on the stock but raised its target price by 7% to 970p.
“Resilient to the cycle, a beneficiary of dollar strength, strong balance sheet, buyback running through and a bid (from Apollo) earlier in the year,” were strengths highlighted by the bank.
Barclays noted that the online education specialists beat its own forecasts of organic growth, 7% vs 4%, adding an ability to beat expectations.
Analysts at the bank raised its outlook for organic growth and adjusted operating profit for financial 2022.
However, the broker did expect organic growth to slow in 2023 to 2% from 5% in 2022.
This is due to several factors, including “online program management declining on the loss of the Arizona State University contract and reopening benefits dropping out at Assessment and Qualifications and English language learning.”
“On point 1) they are considering strategic options for OPM so that drag may disappear, and on point 2) it is not easy to separate reopening from sustainable growth, but we think it is right to be cautious given a 10-year track record of challenges,” said Barclays.
Yesterday, Pearson reported healthy revenue as demand for English learning soared.