Shares in Pearson (LON:PSON) have fallen into the red in today’s session, pressured by a rating and price target downgrade at Barclays, with the analysts pointing to challenges and downside risks. The comments follow the blue-chip publisher’s first-quarter results last month when the company posted ‘a good start’ to the year.
As of 13:37 BST, Pearson’s share price had given up 1.84 percent to 879.70p, underperforming the benchmark FTSE 100 index which has added 0.31 percent to 7,727.42 points. The group’s shares have lost more than 21 percent of their value over the past year, as compared with about a 3.4-percent gain in the Footsie.
Barclays trims stance on Pearson
Barclays lowered its rating on Pearson from ‘equal weight’ to ‘underweight’ today, trimming its price target on the shares from 855p to 815p. Proactive Investors quoted the analysts as saying in a note to clients that the blue-chip publisher faced many challenges and that they have some concerns that there are more downside risks.
“We think that the shares are no longer pricing these risks, with even an upside scenario, which requires very good execution, offering limited share price upside,” the broker pointed out. The analysts further reckon that while the shift from new print books to print rental will become ‘less of a drag’ over time, they still saw ‘a multi-year drag from print’.
Barclays has also pointed to risks from slow take-up of integrated digital products, competitive pressures from Cengage Unlimited and the role of US e-commerce giant Amazon in this market over time.
Other analysts on blue-chip publisher
The 17 analysts offering 12-month price targets for Pearson for the Financial Times have a median target of 701.00p on the shares, with a high estimate of 975.00p and a low estimate of 450.00p. As of June 13, the consensus forecast amongst 18 polled investment analysts covering the blue-chip publisher has it that the company will underperform the market.