On Thursday, BMO Capital Markets increased its price target on Stride Inc. (NYSE:LRN) to $73 from $72, while retaining an Outperform rating on the stock. The revision follows Stride's reported earnings for the third fiscal quarter of 2024, which surpassed the expectations set by the company's guidance, BMO Capital's own estimates, and the consensus.
Stride Inc., which operates in the education sector, demonstrated a strong performance in both its General Education (GenEd) and Career Learning segments, with the latter experiencing a notable reacceleration in growth for middle and high school levels. However, it was noted that the Adult Learning division, which is comparatively smaller, continued to face challenges.
In response to the company's robust quarterly results, Stride's management has revised its full-year 2024 earnings (FY24E) guidance upward, reflecting the positive momentum seen in the recent quarter. This adjustment has prompted BMO Capital to also increase its own financial estimates for Stride Inc.
The new price target of $73 reflects a slight increase from the previous target but indicates a continued positive outlook for Stride Inc. by BMO Capital. The firm's analysis credits the strong quarter and the upward adjustment of the company's own financial forecasts as key drivers for the revised target price.
InvestingPro Insights
Stride Inc.'s (NYSE:LRN) recent earnings beat and upward revision in guidance are complemented by promising data and insights from InvestingPro. With a market capitalization of $2.69 billion and a P/E ratio that stands at 14.5, Stride is trading at a valuation that appears attractive relative to its near-term earnings growth potential. In fact, the P/E ratio adjusted for the last twelve months as of Q3 2024 is slightly lower at 14.35, indicating a consistent valuation over time.
InvestingPro Tips highlight Stride's significant return over the last week, with a 10.43% price total return, and a strong return over the last year, with a 67.32% price total return. These figures underscore the stock's impressive performance in the short and medium term. Additionally, the company's cash flows are robust enough to sufficiently cover interest payments, and its liquid assets exceed short-term obligations, suggesting a healthy financial position.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, including insights on Stride's moderate level of debt and predictions from analysts that the company will be profitable this year. Interested readers can find more tips at https://www.investing.com/pro/LRN and can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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