Pearson’s stock price falls after revenue slowdown
Academic publisher Pearson saw its stock price fall almost three per cent in early trading after reporting a slowdown in quarter-on-quarter organic growth.
“Pearson’s transformation from being an owner of media titles like the Financial Times and selling expensive physical academic books to a company at the forefront of digital education has not been without pain, but means it is now in a more sustainable place,” said Russ Mould, investment director at AJ Bell.
“The next frontier for the company to conquer is AI. The recently announced tie-up with Microsoft will help in this regard but in the here and now there are just a few niggles for investors.”
This week, the two companies announced a multiyear partnership to address the global skills gap in artificial intelligence.
In the trading update today, Pearson said adjusted operating profit is expected to come in between £595m to £600m, compared to a consensus of £599m.
Notably, underlying revenue in US higher education grew two per cent, compared to a five per cent fall in international higher education.
The bump came from an eight per cent growth in etext units, while its virtual schools division fell by only one per cent, exceeding expectations.
Pearson also announced that its Workforce Skills arm is also set to be renamed “Enterprise Learnings and Skills”, with business being transferred from Higher Ed into the segment.
However, UBS analyst Adam Berlin warned that the quarter on quarter organic growth slowdown “could be taken negatively, given strong recent share price performance”.
“We expect an acceleration in 2025 driven by Pearson Vue and Virtual Schools,” he added.
Pearson is set to publish its full-year results on 28 February.
“I am pleased with the progress Pearson has made in 2024, successfully executing against our financial and strategic priorities,” said the firm’s chief executive Omar Abbosh.
“The group is well positioned, with continued confidence, as we look to build on our strategic and operational progress and deliver long-term future value for our shareholders.”