Chegg Inc. (NYSE:CHGG) is well positioned to beat the conservative expectations for the third quarter and full year 2022, according to Needham.
The Analyst: Ryan MacDonald upgraded the rating for Chegg from Hold to Buy, while establishing a price target of $28.
The Thesis: The company's third-quarter guidance assumes a decline in subscribers of around 500,000, which seems likely to be beaten, MacDonald said in the upgrade note
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"While it is possible for Chegg subs do decline by greater than enrollments, we believe continued int'l expansion and domestic stabilization, supported by stable usage in our student survey and a strong return of int'l enrollments, take the bear case off of the table," the analyst wrote.
The Fall 2022 Survey suggests that course loads "have returned to normal," while Chegg "screened well on study tool usage, gaining share domestically" and organic subscriber additions in the international markets "remain a strength," he added.
CHGG Price Action: Shares of Santa Clara, California-based Chegg had risen by 10.31% to $20.92 at the time of publication Monday.