Benzinga - by Priya Nigam, Benzinga Staff Writer.
Shares of Chegg Inc (NYSE: CHGG) slipped in early trading on Tuesday, after declining more than 8% in the premarket session.
The company reported its fourth-quarter results amid an exciting earnings season. Here are some key analyst takeaways from the release.
- Piper Sandler analyst Arvind Ramnani downgraded the rating from Neutral to Underweight, while reducing the price target from $9.00 to $8.50.
- KeyBanc Capital Markets analyst Jason Celino maintained a Sector Weight rating on the stock.
- William Blair analyst Stephen Sheldon reiterated a Market Perform rating.
- Needham analyst Ryan MacDonald reiterated a Hold rating on the stock.
Piper Sandler: Chegg reported only a modest upside despite “muted” expectations for the fourth quarter, “wrapping up a year with sustained revenue headwinds,” Ramnani said in the downgrade note.
“Subscription Services revenues declined 4.7% in FY23, with domestic/US subscribers constituting ~74% and international ~26%,” the analyst wrote. He added, however, that the company’s disciplined spend management was impressive, as it offset some of its revenue pressure on margins.
KeyBanc: Chegg reported a “modest” revenue beat, mainly due to better Subscription Services revenues, Celino said. “The slightly higher revenue, along with expense management, drove EBITDA to $66.2M (35.2% margin), ahead of consensus of $63.1M (33.9% margin),” the analyst wrote.
He further stated that the company issued disappointing first-quarter guidance “as new subscriber growth, particularly in the U.S., remains challenged.”
William Blair: Chegg’s fourth-quarter results were “slightly ahead of our estimates, although subscriber trends remained weak,” Sheldon said in a note. The company’s first-quarter guidance was disappointing on both the top and bottom line, he added.
Although overall subscriber trends remained weak, with unique subscribers declining 9% year-over-year, the company’s international subscriber count grew for the first time in two years, the analyst stated.
Needham: Chegg continues to focus on AI, after its successful rolled out of automated answers to learners in the first quarter, which resulted in a “material Y/Y increase in the amount of Q&A on the platform at a roughly 75% lower cost,” MacDonald said.
“Despite this, CHGG is not yet seeing the fundamental benefit, with GM guided down Y/Y and adj. EBITDA margin compressing at a lower rev. run-rate,” he added.
CHGG Price Action: Shares of Chegg had declined by 3.23% to $9.00 at the time of publication on Tuesday.
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Latest Ratings for CHGG
| Feb 2022 | Morgan Stanley | Maintains | Equal-Weight | |
| Feb 2022 | Craig-Hallum | Maintains | Hold | |
| Feb 2022 | Piper Sandler | Maintains | Overweight |
View the Latest Analyst Ratings
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