On Monday, BMO Capital Markets sustained their Outperform rating on shares of Strategic Education (NASDAQ:STRA), with a consistent price target of $130.00. The firm's confidence in the company's continued growth was bolstered by recent meetings with Strategic Education's management.
The discussions revealed a robust recovery from pandemic impacts, with all major institutions under the company's umbrella, including Strayer University and Capella University in the U.S., along with Torrens University in Australia, experiencing a return to annual enrollment growth.
The first-quarter results of 2024 have demonstrated that Strategic Education enjoys significant incremental margins from additional student enrollments. BMO anticipates this trend to persist, projecting further enrollment growth and consequent margin expansion.
The firm's outlook is supported by the performance of Strategic Education's stock, which has seen a positive trajectory. Despite this recent appreciation in value, BMO suggests that there is still room for the stock to climb higher.
Strategic Education's ability to bounce back from the downturn experienced during the pandemic has been noteworthy. The company's major institutions have not only stabilized but have entered a phase of growth. This recovery is reflected in the enrollment numbers, which have been climbing steadily.
The positive first-quarter results of 2024 have showcased the company's operational efficiency, with substantial margins achieved through increased student numbers. This financial health is a direct result of Strategic Education's strategic initiatives and the successful execution of its business model.
In conclusion, BMO's outlook for Strategic Education remains positive, with the firm expecting the company to maintain its growth trajectory. The maintained Outperform rating and $130.00 price target reflect BMO's belief in the company's potential for further stock appreciation, driven by sustained enrollment growth and margin expansion.
In other recent news, Strategic Education Inc. has been the focus of revised outlooks from BMO Capital Markets and Truist Securities, following the company's strong first-quarter results for 2024. BMO Capital Markets increased its price target for the company to $130, maintaining an Outperform rating, in response to robust revenue and margin performance across all business segments.
Truist Securities also upgraded Strategic Education's stock to Buy, raising the price target to $125, based on positive sector conditions and an uptick in enrollment momentum.
Strategic Education's first-quarter performance was marked by revenue growth in the U.S. Higher Education (USHE) segment and a return to year-over-year enrollment growth in its Australia and New Zealand (ANZ) division.
The company's Education Technology Services (ETS) segment also continued to build momentum with its Sophia Learning and Workforce Edge products. Both BMO Capital and Truist Securities have revised their estimates for Strategic Education upward, citing significant margin expansion across all segments.
In addition to these developments, Strategic Education announced a shelf offering after the market closed, filed on behalf of a selling shareholder. This news, along with the company's recent performance, forms the basis of the latest analyses from BMO Capital Markets and Truist Securities.
InvestingPro Insights
Strategic Education's financial outlook is further reinforced by insights from InvestingPro. With a market capitalization of $2.71 billion and a robust revenue growth of 9.72% in the last twelve months as of Q1 2024, the company exhibits a strong financial position. The P/E ratio stands at 25.59, which is considered attractive when paired with the company's near-term earnings growth, as indicated by a very low PEG ratio of 0.16 for the same period.
InvestingPro Tips suggest that Strategic Education not only holds more cash than debt, ensuring financial stability, but also analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's financial future. Moreover, the company's dividends have been consistent for 8 consecutive years, offering a dividend yield of 2.16%, which can be appealing for income-focused investors.
For those looking for deeper insights and more tips, there are additional InvestingPro Tips available for Strategic Education. Subscribers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes access to these valuable investment insights.
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