Investment firm Canaccord has adjusted its price target for Stride (LRN, Financial) stock, increasing it from $145 to $155, while maintaining a Buy rating. This revision comes in anticipation of Stride's upcoming results, highlighting the company's successful enrollment growth. Contributing to this growth are improved marketing strategies that have enabled Stride to tap into the increasing demand for online education.
Notably, Stride's financial outlook remains stable despite potential policy changes following a recent executive order intended to dismantle the Department of Education. This order is expected to have minimal impact on the company, as Stride receives less than 5% of its total revenue from federal funding. The firm's strategic positioning thus appears robust in the current educational and regulatory landscape, as reflected in Canaccord's updated financial model.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Stride Inc (LRN, Financial) is $143.75 with a high estimate of $150.00 and a low estimate of $139.00. The average target implies an upside of 1.96% from the current price of $140.99. More detailed estimate data can be found on the Stride Inc (LRN) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Stride Inc's (LRN, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Stride Inc (LRN, Financial) in one year is $55.13, suggesting a downside of 60.9% from the current price of $140.99. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Stride Inc (LRN) Summary page.
LRN Key Business Developments
Release Date: January 28, 2025
- Revenue: USD587.2 million, up 16% from Q2 FY24.
- Total Average Enrollment: 230,600, up 19.4%.
- Adjusted Operating Income: USD135.6 million, up 43% from last year.
- Earnings Per Share (EPS): USD2.03, up 32% from last year.
- Capital Expenditures: USD14.8 million, up from USD12.7 million last year.
- Career Learning Revenue: USD213.1 million, up 29%.
- General Education Revenue: USD354.3 million, up 13%.
- Gross Margin: 40.8%, up 100 basis points from last year.
- Adjusted EBITDA: USD160.4 million, up 36%.
- Interest Expense: USD2.7 million.
- Effective Tax Rate: 25.7%.
- Free Cash Flow: USD208.6 million, up USD48 million from the prior year period.
- Cash and Cash Equivalents: USD515.1 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stride Inc (LRN, Financial) reported record enrollments, helping 230,000 students, indicating strong demand for their programs.
- The company posted a 16% increase in revenue to USD587.2 million compared to the previous year.
- Adjusted operating income rose by 43% to USD135.6 million, showcasing improved profitability.
- Career learning programs saw a significant enrollment growth of 30.9%, driving a 29% increase in revenue to USD213.1 million.
- Stride Inc (LRN) raised its full-year revenue and profitability guidance, reflecting confidence in continued growth.
Negative Points
- Revenue per enrollment is expected to decline by 1% to 2% due to state mix impacts.
- The adult learning business experienced a revenue decline of USD6.1 million, indicating challenges in this segment.
- Despite strong enrollment growth, the incremental career funnel has not materialized as strongly as expected.
- Selling, general, and administrative expenses are expected to increase slightly in the second half of the year.
- The company faces ongoing challenges in improving and executing across all business areas, requiring vigilance to ensure long-term success.
