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 concerning Chegg’s recent financial performance and future guidance. The fourth quarter results for Chegg surpassed expectations, with net revenues and adjusted EBITDA exceeding Paris’s estimates, FactSet consensus, and even the management’s own projections. However, the forward-looking guidance for the first quarter of 2024 was less promising, falling below consensus expectations in terms of both revenue and adjusted EBITDA growth, which indicates a potential slowdown in Chegg’s financial performance.
The decision to maintain a Market Perform rating reflects the stock’s current valuation relative to its peers and the potential upside from the adoption of generative AI technologies. Chegg’s shares are trading at multiples significantly lower than the industry average, suggesting they might be undervalued. However, the uncertainty in the near-term outlook, characterized by reduced visibility into future growth, has led Paris to adopt a cautious stance. He suggests that any improvement in visibility or a return to even modest growth could prompt a reevaluation of the stock, indicating the current Hold rating is subject to change based on future company performance and market conditions.
In another report released today, BMO Capital also maintained a Hold rating on the stock with a $10.00 price target.
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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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