McGraw-Hill Education Deal Supports Higher Share Price for K12 (LRN) - Analyst
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Price: $29.61 +0.89%
Rating Summary:
5 Buy, 2 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
5 Buy, 2 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade LRN Now!
Analysts at Wells Fargo said this morning's deal in which McGraw-Hill (NYSE: MHP) sold its education unit to Apollo Global Management for $2.5 billion provides support for their $18-$22 valuation range on K12, Inc. (NYSE: LRN).
"Our target range applies a 4.0x multiple at the low end and a 5.0x multiple at the high end to our FY2014 (June) EBITDA estimate," the analyst notes. "Applying the McGraw Hill Education multiple to our estimate of K12's CY2012 (Dec.) EBITDA, would imply a comparable valuation of $22.61. In addition, in contrast to McGraw-Hill Education's contracting earnings, K12's revenue and EBITDA is expanding and its comprehensive K-12 digital curriculum assets are superior, in our opinion."
The firm maintained a Market Perform rating on LRN.
For an analyst ratings summary and ratings history on K12, Inc. click here. For more ratings news on K12, Inc. click here.
Shares of K12, Inc. closed at $16.27 yesterday, with a 52 week range of $15.83-$28.83.
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"Our target range applies a 4.0x multiple at the low end and a 5.0x multiple at the high end to our FY2014 (June) EBITDA estimate," the analyst notes. "Applying the McGraw Hill Education multiple to our estimate of K12's CY2012 (Dec.) EBITDA, would imply a comparable valuation of $22.61. In addition, in contrast to McGraw-Hill Education's contracting earnings, K12's revenue and EBITDA is expanding and its comprehensive K-12 digital curriculum assets are superior, in our opinion."
The firm maintained a Market Perform rating on LRN.
For an analyst ratings summary and ratings history on K12, Inc. click here. For more ratings news on K12, Inc. click here.
Shares of K12, Inc. closed at $16.27 yesterday, with a 52 week range of $15.83-$28.83.
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