Northland Capital Markets Upgrades Chegg (CHGG) to Outperform citing Improved Enrollment Outlook

September 8, 2022 7:06 AM EDT
Get Alerts CHGG Hot Sheet
Price: $28.11 -1.06%

Rating Summary:
    6 Buy, 12 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 5 | Down: 14 | New: 17
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Northland Capital Markets analyst Mike Grondahl upgraded Chegg (NYSE: CHGG) from Market Perform to Outperform with a price target of $30.00.

The analyst comments "Better Summer Enrollment Leads to Better Fall per Management: Chegg had a nice second quarter driven primarily by strength in summer school class enrollment. There was a nice shift from 1Q22 in which students were prioritizing earnings over education, but it seems it has shifted back towards education due to strong summer enrollment which is often an indicator for enrollment for the fall semester. Remember from the 2Q22 update, Chegg conducted a survey in which the results displayed that more students are taking summer courses on a y/y basis as a direct result of their experience with the pandemic and learning, allowing them to get ahead or catch up depending on their circumstance. The courses they are taking over the summer are more difficult as compared to previous quarters in which it was highlighted that students were taking much easier course loads. Management also highlighted that historically, higher summer attendance was an indicator for stronger enrollments in the fall. We decided to do some digging to gather more insight on fall enrollment outlook which we discuss later, but outlook is solid for both community colleges and universities. We are establishing our 2023 revenue, adj. EBITDA, and adj. EPS estimates at $829.0M, $238.6M, and $1.09, respectively. These are slightly above Street estimates."

For an analyst ratings summary and ratings history on Chegg click here. For more ratings news on Chegg click here.

Shares of Chegg closed at $21.45 yesterday.

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