After a truly awful couple of years, which saw the stock fall from highs of £15 in early 2015 to lows of £5.50 at the start of 2017, the former Financial Times-owner has picked up somewhat in 2018. Opening at £7.32, the stock rode out a bit of a wobble in the first couple of months, before transitioning into a steady rise from March onwards.
The firm’s first quarter update in early May (more on that below) then helped propel it towards a 10 month high of £9.30 by the end of that month, a peak it hasn’t quite been able to hold onto in the subsequent weeks. Pearson PLC now sits at a current trading price of £8.98.
It perhaps shows how bad things have been at Pearson that a 1% rise in total Q1 sales led to a 7% surge in its price. That increase in revenue saw a 3% rise in North America and a 6% jump in its Core division (including the UK, Australia and Italy) counter a sharp 12% decline in its Growth segment (which saw South Africa ruin a strong showing in Brazil and China).
The company also confirmed that the ‘cost efficiency programme’ announced in August 2017 is on track to deliver £300 million of annualised cost savings by 2020. As for its full year guidance, it is looking for operating profit of between £520 million and £560 million.
In terms of Friday’s interim results, analysts at Barclays (LON:BARC) have cautioned that for various reasons Pearson’s first quarter figures aren’t useful for trying to ‘pull out an underlying pattern’ that might dictate its full year performance. Still, investors will be hoping that revenue growth posted in Q1 has been sustained in the first half as a whole.
Pearson PLC (LON:PSON) has a consensus rating of ‘Hold’ alongside an average target price of £7.17.
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