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KeyBanc has upgraded Chegg Inc (NYSE:CHGG) to an Overweight rating and established a $29.00 price target for the stock after the company’s recent messaging at recent conferences suggests an elevated focus on profitability. KeyBanc has decided to make a tactical upgrade to Chegg on the premise that EBITDA margin upside will be the key driver of the stock over the next 12 months.
The educational software company has yet to see any meaningful reacceleration. However, Key First Look Data suggests consistent growth trends for the last three quarters for Chegg and Course Hero, and improvement at Quizlet. As a result, analysts believe industry trends for the broader academic support space have relatively stabilized.
They wrote in a note, “We believe Chegg, and the academic support market represent one of the most underappreciated opportunities in EdTech. Providing academic support tools such as textbook solutions, Expert Q&A, writing, and Math tools, we believe Chegg provides one of the most complete platforms and is best positioned in the market.”
Shares of CHGG are up 2.55% in pre-market trading on Thursday.
