LRN - Stride stock surges on earnings beat upbeat outlook

2023-04-26 08:15:53 ET

Stride ( NYSE: LRN ) stock ran higher in premarket action on Wednesday after topping earnings expectations on Tuesday evening.

The online learning company reported $1.30 in adjusted EPS for the fiscal third quarter, beating the Street consensus by $0.21, while $470.28M also edged estimates . Based upon the strong Q3 print, management pushed revenue expectations for the full year to a range of $1.805B to $1.825B, up from $1.775B to $1.815B forecast in the prior quarter. An adjusted operating income guide in the range of $193M to $200M was hiked from $180M to $200M as well.

“Stride ended the quarter with just over 179,000 enrollments (grew sequentially in the fiscal second quarter and third quarter for the first time ever), and application volumes continued to trend positively through this week,” William Blair analyst Stephen Sheldon noted in an appraisal of the results.

He also noted that the launch of the new Learning Hub offers another catalyst for the stock in the near term.

“This represents yet another new product launch, along with the recent pilots of its career platform, teacher professional development solutions, and tutoring platform, all of which have received positive feedback thus far,” Sheldon concluded. “Overall, we remain optimistic on the multiyear growth outlook for Stride, especially as career learning continues to surpass

expectations, and as GE enrollments appear to have reached a bottom earlier this year.”

He maintained an Outperform rating on the stock. Morgan Stanley also raised estimates, taking its price target to $50 from a prior $46 on the back of the strong results. Nonetheless, the team at the bank remained at a Hold-equivalent rating.

“We think continued evidence of strong growth in Career Learning could drive further re-rating, but risk that enrollments step down post-pandemic remains,” the analysis explained. “The past two quarters of strong enrollments have highlighted continued demand.”

Shares of Stride ( LRN ) gained 7.2% in premarket action on Wednesday.

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