Barrington analyst Alexander Paris has maintained their neutral stance on CHGG stock, giving a Hold rating today.
Alexander Paris has given his Hold rating due to a combination of factors including Chegg’s recent financial performance and future expectations. While the company’s first quarter results surpassed estimates, showing a resilient performance despite a revenue drop of 7.1%, the second quarter guidance provided by management fell short of consensus expectations. This included anticipated declines in both revenue and adjusted EBITDA, alongside a predicted reduction in gross margins compared to the previous year.
Additionally, Paris acknowledges the strategic decision by Chegg to integrate generative AI, which holds promise for the company’s long-term market positioning and user experience enhancement. However, the current lack of visibility in the near term, underscored by the significant year-to-date stock price decline, warrants a cautious approach. The report suggests that potential for an upgrade in rating exists, but it hinges on the return of growth and improved clarity on Chegg’s prospects, which Paris anticipates might begin to materialize in early 2025.
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Chegg (CHGG) Company Description:
Chegg, Inc. engages in the operations of learning platform for students. It intends to empower students to take control of their education and help the students study, college admissions exams, accomplish their goals, get grades, and test scores. The firm offers required and non-required scholastic materials including textbooks in any format; access to online homework help and textbook solutions; course organization and scheduling; college and university matching tools; and scholarship connections. Its services include Chegg study, writing, tutors, and math solver. The company was founded by Osman Rashid and Aayush Phumbhra on July 29, 2005 and is headquartered in Santa Clara, CA.
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