Citi Removes High Risk Rating from Stride Inc. (LRN)

Citi analyst Thomas Singlehurst raised the price target on Stride Inc. (NYSE: LRN) to $70.00 (from $65.00) while maintaining a Buy rating.

The analyst comments "We update our forecasts to take into account the better-than-expected 1Q24 results and upbeat FY24 guidance. This drives a 15% increase to our forecast of adjusted operating income and a c.20% increase to our full-year FD EPS forecast. Looking into 2025 and beyond, the changes to our numbers are less dramatic but we still move our LT forecasts up by 0-5% into the medium term. While the upgrade is helpful in terms of both sentiment and valuation (we move our PT up to $70 from $65), the real significance of the 1Q results is that they demonstrate the group can grow well (enrolment up 8% and revenue per enrolment expected to be up 4-6% for the year) without any impact from the COVID pandemic. In this context, we think this ‘de-risks’ the investment case substantially and, consistent with that, we remove the High Risk rating while maintaining our Buy rating."

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