24th Oct 2022 18:40
(Alliance News) - Pearson PLC on Monday said its trading in the nine months to September 30 was "strong", surpassing UBS expectations with underlying sales growth of 7% year-on-year.
UBS said it expects investors to react "positively" to the latest trading update and AJ Bell analyst Danni Hewson said it demonstrated that the firm's "digital transition continues to pay off".
The London-based education publisher said Assessment & Qualifications sales grew 12% in the nine-month period due to a "continued focus on health and wellness as well as US Student Assessment and UK & International Qualifications" as exam timetables continued to normalise after Covid-19 disruption.
Virtual Learning sales were up 5%, and the English Language Learning sales were up 28%. Higher Education sales were down 4%, however, holding back the overall growth.
Pearson said it is on track to deliver at least GBP100 million of cost efficiencies next year, and added that it remains on track to deliver group sales and adjusted operating profit in line with consensus expectations for 2022.
"While Pearson did not upgrade FY22 guidance, we think there could still be mid to high SD consensus upgrades to reflect FX tailwinds and better revenue growth," UBS firm said.
AJ Bell analyst Hewson commented: "The company's English language learning products are notably enjoying strong demand and the robust update suggests that after a difficult decade and transition from big academic textbooks to a more internet-based offering, Pearson is in a good position."
In August, Pearson reported a pretax profit of GBP179 million for the six months that ended June 30, multiplied from GBP4 million a year before, as operating expenses were reduced by 7.3% to GBP690 million from GBP744 million.
For analysts at Shore Capital, Monday's statement demonstrated "positive momentum".
Further, Shore Capital "like" Pearson's "growing exposure to and substantial investment in digital products, and its status as a beneficiary of positive medium-term outlook for global learning spend."
As a result, Shore Capital forecasted three-year aggregate adjusted earnings per share growth of 62% and called the group's current stock valuation as "undemanding" and reiterated its 'Buy' recommendation.
On Monday, Pearson closed up 7.3% at 951.96 pence in London. In the year-to-date, the stock has risen by just over 58%.
By Heather Rydings; heatherrydings@alliancenews.com
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