BMO Capital Boosts Price Target for Stride (LRN) Following Q3 Success | LRN Stock News

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May 01, 2025

BMO Capital has increased its price target for Stride (LRN, Financial) from $139 to $161, continuing to uphold an Outperform rating on the stock. This adjustment follows Stride's strong performance in the third quarter, driven by robust results in both its General Education and Career Learning segments. Despite not issuing guidance for fiscal year 2026, Stride's management is optimistic about a promising start to the upcoming year, supported by a generally favorable funding environment.

Wall Street Analysts Forecast

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Based on the one-year price targets offered by 4 analysts, the average target price for Stride Inc (LRN, Financial) is $159.25 with a high estimate of $170.00 and a low estimate of $141.00. The average target implies an upside of 10.14% from the current price of $144.59. More detailed estimate data can be found on the Stride Inc (LRN) Forecast page.

Based on the consensus recommendation from 5 brokerage firms, Stride Inc's (LRN, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.

Based on GuruFocus estimates, the estimated GF Value for Stride Inc (LRN, Financial) in one year is $55.42, suggesting a downside of 61.67% from the current price of $144.585. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Stride Inc (LRN) Summary page.

LRN Key Business Developments

Release Date: April 29, 2025

  • Total Revenue: $630.4 million, up 17.8%.
  • Career Learning Revenue: $223.9 million, up 33%.
  • General Education Revenue: $370.8 million, up 13%.
  • Average Enrollments: 141,500, up 14% from last year.
  • Revenue per Enrollment: $2,415 compared to $2,420 last year.
  • Gross Margin: 40.6%, up 190 basis points from last year.
  • SG&A Expenses: $118.5 million, increased by 5%.
  • Adjusted Operating Income: $141.7 million, up 47%.
  • Adjusted EBITDA: $168.3 million, up 40%.
  • Diluted EPS: $2.02.
  • Capital Expenditures: $15.8 million, down from $16.3 million.
  • Free Cash Flow: $37.3 million, down from $52.2 million.
  • FY25 Revenue Guidance: $2.370 billion to $2.385 billion, up from previous guidance.
  • Adjusted Operating Income Guidance: $455 million to $465 million, up from previous guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Stride Inc (LRN, Financial) reported a 21% increase in enrollment compared to last year, indicating strong demand for its programs.
  • The company raised its FY25 revenue and adjusted operating income guidance, reflecting confidence in continued growth.
  • Revenue from career learning middle and high school programs grew by 33%, driven by a 34% increase in enrollments.
  • Gross margins improved by 190 basis points to 40.6%, with expectations of a 200 basis point improvement for the full year.
  • Stride Inc (LRN) is making significant investments in tutoring and socialization platforms, enhancing the student experience and potentially driving future growth.

Negative Points

  • Revenue per enrollment is expected to decline by less than 1% for the full year, indicating potential pricing pressures.
  • The company faces constraints on new enrollments due to some schools closing enrollment for the school year.
  • Despite strong demand, Stride Inc (LRN) has not fully capitalized on opportunities in lower grade levels, indicating room for improvement.
  • Free cash flow decreased to $37.3 million from $52.2 million, reflecting potential challenges in cash generation.
  • The company has not yet fully cracked the code on optimizing its career learning program, indicating ongoing challenges in this area.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.