Price Target Adjustment#
Truist Securities has lowered its price target for Strategic Education Inc. (NASDAQ:STRA) from $85 to $80 while maintaining a Hold rating on the stock. This adjustment comes after the company's first-quarter results fell short of expectations for both revenue and earnings per share.
Earnings Report Highlights#
In its recent earnings report, Strategic Education met earnings expectations with a figure of $1.41 per share. However, the company reported revenue of $305.9 million, which was below the anticipated $313.8 million. This revenue shortfall has contributed to a decline in the stock price, which has dropped 11.6% over the past week.
Enrollment Challenges#
Truist pointed out that Strategic Education is experiencing ongoing challenges with international enrollments, particularly in Australia and New Zealand. While U.S. higher education enrollment has exceeded expectations and may see growth by the end of 2026, the weaker performance abroad has led to a more cautious outlook for the company's revenue in fiscal year 2026.
Valuation Perspective#
Despite the recent challenges, Truist noted that Strategic Education is trading at a lower valuation compared to its peers in the education sector. The company currently has a price-to-earnings (P/E) ratio of 13.11 and a price/earnings to growth (PEG) ratio of 0.62, suggesting that the stock may be undervalued. Truist continues to hold a Hold rating, citing potential risks to revenue growth expectations for 2027.
In summary, while Strategic Education faces challenges, it is also exploring growth opportunities in Education Technology Services and employer-focused strategies.