BMO Capital has raised its price target for Strategic Education (STRA, Financial) from $97 to $98, maintaining an Outperform rating on the company. This adjustment follows the firm's impressive first-quarter performance, where results surpassed expectations due to stronger-than-predicted margins. Despite some limitations in enrollment growth at its U.S. Higher Education segment and within the Australia/New Zealand segment, the company managed to perform well. These constraints were primarily due to non-affiliated enrollments and the impact of new visa policies affecting international students.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Strategic Education Inc (STRA, Financial) is $102.67 with a high estimate of $105.00 and a low estimate of $98.00. The average target implies an upside of 27.30% from the current price of $80.65. More detailed estimate data can be found on the Strategic Education Inc (STRA) Forecast page.
Based on the consensus recommendation from 3 brokerage firms, Strategic Education Inc's (STRA, Financial) average brokerage recommendation is currently 1.7, 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 Strategic Education Inc (STRA, Financial) in one year is $98.68, suggesting a upside of 22.36% from the current price of $80.65. 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 Strategic Education Inc (STRA) Summary page.
STRA Key Business Developments
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strategic Education Inc (STRA, Financial) reported an 8% increase in revenue and a 26% increase in operating income for the full year 2024.
- The company's adjusted earnings per share grew by 31% to $4.87.
- US higher education segment saw a 6% increase in average total enrollment, with employer-affiliated enrollment growing by 16%.
- The Australia and New Zealand segment experienced a 5% increase in average total enrollment and an 11% revenue growth on a constant currency basis.
- The education technology services segment had a record year, with revenue growing by more than 30% and operating income by almost 50%.
Negative Points
- US higher education revenue was down slightly in the fourth quarter due to higher scholarships and a shift towards employer-affiliated students.
- Enrollment growth slowed in the back half of the year, with some quarters falling below expectations.
- The regulatory environment in Australia remains uncertain, with potential impacts on international student enrollment due to visa processing changes.
- Operating expenses were higher in the fourth quarter due to one-time implementation-related costs associated with a new partnership.
- Revenue per student in US higher education declined more steeply than expected, driven by a shift to employer channels and higher scholarships.
