2u (TWOU): Strong DGP Lineup for FY18 - Needham

Needham & Company analyst, Kerry Rice, reiterated his Buy rating on shares of 2U, Inc. (NASDAQ: TWOU) and raised his price target to $62 after revenue was $65.0M, up 32% y/y and above consensus of $64.3M, primarily driven by 27% y/y increase in full course equivalents (FCE) and 4% y/y increase in average revenue/FCE. Adjusted EBITDA was ($1.5M), improving from ($2.1M) in 2Q16 and above consensus of ($1.8M). EBITDA margin was (2.3%), representing a 190 bps improvement from 2Q16.

The analyst stated "given the high visibility, we are confident in the company's ability to meet its core DGP FY17 guidance. With the acquisition of GetSmarter (GS) closed, 2U raised its FY17 guidance, which we believe should be achievable given the visibility, recent wins, and moderate contribution. The 2018 pipeline appears strong as the company has now slotted 12 of 13 program launches expected for next year, including the 3 new programs announced today with Harvard, Emerson, and UNC".

The new PT of $62 is up from $54.

For an analyst ratings summary and ratings history on 2U, Inc. click here. For more ratings news on 2U, Inc. click here.

Shares of 2U, Inc. closed at $50.92 yesterday.

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