Coronavirus - we're here to help
From how to access your account online, scam awareness, your wellbeing and our community we're here to help.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log in to HL Account

Berenberg raises target price on 'sell' rated Pearson

Fri 04 September 2020 12:32 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Analysts at Berenberg raised their target price on media firm Pearson from 400.0p to 450.0p on Friday, but stated the group's incoming chief executive, Andy Bird, faced "material challenges".

In Berenberg's view, Pearson was too geared to students aged 4-18 in mature markets and with a declining birth rate, it stated that demographic did "not offer growth" and also pointed to stiff competition in the market already as putting pressure on profits.

"We think there are more opportunities in lifelong learning, but Pearson's exposure to that segment is limited," said the analysts.

The German bank added that to fix the group's publishing unit, and reorientate towards growth opportunities, Pearson needed "an earnings reset", leading it to also reiterate its 'sell' rating on the firm as short-term consensus earnings looked "too high".

"We believe consensus estimates for Pearson are, yet again, too high. Higher education courseware forecasts imply a 5% decline in H2, versus 14% in H1. This seems unrealistic given the likely hit to enrolments, a trend for lower units per student, and closure of some campus bookstores," said the analysts, which placed their headline operating profit estimates 14% below consensus for 2020.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.


    More stockbroker tips from ShareCast

    Latest economy and stock market articles