Strategic Education Outperforms with Strong Q1 Revenue and Margin Growth; Analyst Reiterates Buy Rating and Increases Target to $130

Analyst Jeffrey Silber of BMO Capital maintained a Buy rating on Strategic Education (STRA – Research Report), boosting the price target to $130.00.

Jeffrey Silber has given his Buy rating due to a combination of factors that highlight Strategic Education’s strong performance and promising outlook. In the first quarter of 2024, Strategic Education exceeded expectations with significant revenue and margin improvements across all business segments. The U.S. Higher Education segment demonstrated robust enrollment growth, particularly in Employer Affiliated and FlexPath programs, which led to an impressive increase in segment margins. Additionally, the Australia/New Zealand segment returned to year-over-year enrollment growth for the first time since the fourth quarter of 2022, with revenue per student also on the rise.

The Education Technology Services division continued to show strong growth, driven by the success of their Sophia and Workforce Edge offerings. The overall margin expansion in all three segments underscores the company’s ability to leverage its growth effectively. Despite the potential short-term pressure on the stock due to a shelf offering filed by a selling shareholder, Silber’s outlook remains positive. He has raised both earnings estimates and the target price to $130, indicating confidence in the company’s differentiated product offerings and its ability to stand out amidst intense industry competition.

In another report released on April 26, Truist Financial also initiated coverage with a Buy rating on the stock with a $145.00 price target.

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Strategic Education (STRA) Company Description:

Strategic Education, Inc. engages in the provision of educational services. It focuses on improving college affordability, student engagement and workforce readiness. It provides direct path between learning and employment through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets. The company was founded in 1892 and is headquartered in Herndon, VA.