- Barrington Research analyst Alexander Paris has reiterated an Outperform rating on the shares of 2U Inc (NASDAQ: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.
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