Pearson share price: Shore Capital weighs in on K12 business sale

on Feb 19, 2019
Updated: Mar 11, 2020

Shore Capital reckons that Pearson’s (LON:PSN) deal to sell its K12 business in the US simplifies the blue-chip publisher’s business model, Citywire has reported. The comments came as the analysts retained their ‘hold’ rating on the shares ahead of the group’s full-year results later this week.

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Pearson’s share price has been little changed in London this morning, having inched 0.04 percent higher to 911.40p as of 10:35 GMT. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into the red and currently standing 0.48 percent lower at 7,184.65 points.

ShoreCap weighs in on Pearson

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Shore Capital reaffirmed Pearson as a ‘hold’ yesterday, arguing that the stock was trading close to ‘fair value’. The move came after the blue-chip publisher announced that it was selling its US K12 courseware business to Nexus Capital Management for headline consideration of $250 million.

Citywire quoted the broker’s analyst Roddy Davidson as commenting that Shore Capital was ‘encouraged’ by the proposal, which, it reckons, “further simplifies Pearson and will free up funds, resources, and management time to focus on areas of the group that are better suited to generating long-term growth”.

The comments ahead of Pearson’s full-year results on Friday, which, Shore Capital will use as an opportunity to review its forecasts. The FTSE 100 group has flagged full-year profit within its guidance range, while cautioning  that revenue at its US higher education courseware business has declined.

Other analysts on publisher

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Goldman Sachs, which sees the blue-chip group as a ‘sell,’ boosted its price target on the shares from 663p to 682p. According to MarketBeat, Pearson currently has a consensus ‘hold’ rating and an average price target of 757.58p.

As of 10:53 GMT, Tuesday, 19 February, Pearson plc share price is 911.40p.

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