Pearson share price jumps as full year results meet lowered forecast

Company posts pre-tax loss and decline in revenue

Pearson share price jumps as full year results meet lowered forecast

Shares in Pearson Plc (LON:PSON) have jumped in today’s trading, even though the company’s annual financial report showed a pre-tax loss and a further dip in revenue. The educational publisher said today that it had seen a pre-tax profit of £433 million in the 12 months ended December 31, compared with a pre-tax profit of £255 million in the previous year. The company attributed the loss primarily to one-off costs related to its restructuring programme.

Meanwhile, Pearson’s sales fell two percent to £4.47 billion in 2015, due to declines in US Higher Education, UK Qualifications and South Africa, which more than offset “good growth” in other areas of the company’s business.

The company also proposed a final dividend of 32p a share, boosting the overall 2015 dividend to 52p, up two percent from the previous year.

"Our competitive performance during the last three years has been strong, but the challenges in our biggest markets have persisted for longer than anticipated,” Pearson’s chief executive officer, John Fallon, commented. “Pearson is now implementing the plans we announced in January to integrate our business, reduce our cost base and focus on fewer, bigger growth opportunities.”

Despite the lacklustre results, Pearson’s share price jumped more than 5 percent today, as traders were already prepared for bad news after the company’s latest profit warning in January. With the results now in line with the company’s lowered forecast, investors were relieved that the performance was not even worse than expected.

In today’s trading, Pearson shares were up 5.6 percent at 846.00p, as of 10:28 GMT. The stock has risen 14.8 percent since the start of the year and the company’s market capitalisation currently stands at nearly £7 billion.

The 21 analysts offering 12 month price targets for Pearson have a median target of 880.00p, with a high estimate of 1,500p and a low estimate of 450.00p. As of February 20, 2016, the consensus forecast amongst 24 polled investment analysts covering Pearson had it investors to hold their position in the company. The same consensus estimate has been maintained since December 02, 2014, when the sentiment of investment analysts deteriorated from “hold”.

As of 12:05 GMT, Friday, 26 February, Pearson plc share price is 845.50p.

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