Here's Why This Analyst Is Supportive Of 2U Management's Transition Plan & Focus Shift

  • Barrington Research analyst Alexander Paris has reiterated an Outperform rating on the shares of 2U Inc TWOU with a price target of $9.
  • 2U, Inc. will report the financial results of its fourth quarter on Feb. 2, after the market close.
  • The analyst's estimates call for Q4 revenue of $234.0 million, down 4.0% Y/Y; adjusted EBITDA of $49.3 million, up 134.9% Y/Y, and an adjusted EPS of $0.22.
  • The analyst expects FY 2022 revenue of $961.0 million, up 1.6% Y/Y; adjusted EBITDA of $116.0 million, up 74.2% Y/Y, and an adjusted net loss per share of $(0.16).
  • Management reaffirmed its revenue guidance, which calls for revenue to exceed $960 million and increased its guidance for adjusted EBITDA to $115 million - $117 million, above its prior guidance of $105-115 million, said the analyst.
  • The analyst sees FY23 revenue of $980.0 million, adjusted EBITDA of $153.0 million, and adjusted EPS of $0.25.
  • The analyst remarked that on Jan. 9, 2U announced several refinancing transactions that together strengthen the company's credit profile by extending near-term maturities and reducing secured debt by $187 million.
  • As part of the refinance, management said it continues to see positive returns from its platform strategy and the implementation of its Strategic Realignment Plan, originally announced in Q2/22.
  • At current levels, the stock, which is up 23% YTD after declining 69% in 2022, is trading at only 1.4x 2023 revenue estimate, a substantial discount to its Ed Tech peer group average of 3.0x, the analyst noted.
  • The analyst is supportive of management's plan to accelerate 2U's transition to a platform company under the edX brand and shifting its focus to more durable and profitable growth.
  • Price Action: TWOU shares are trading lower by 6.00% at $8.06 on the last check Monday.
Market News and Data brought to you by Benzinga APIs
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: Analyst ColorEarningsNewsGuidancePrice TargetReiterationSmall CapAnalyst RatingsGeneralBriefs
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!