Bank of America Securities analyst Koji Ikeda reiterated a Buy rating on PowerSchool (PWSC – Research Report) yesterday and set a price target of $30.00.
Koji Ikeda has given his Buy rating due to a combination of factors, despite PowerSchool’s mixed fourth-quarter results. While revenue fell short due to the deferral of a significant deal, adjusted EBITDA surpassed expectations and indicated a positive trend. Ikeda emphasizes that PowerSchool’s quarterly performance can be affected by the timing of large deals, but on an annual basis, the company’s fundamentals are improving. The 2024 revenue and adjusted EBITDA guidance are in line or above the Street’s expectations, suggesting good visibility into PowerSchool’s future performance. Ikeda remains confident in PowerSchool’s potential as a long-term leader in the K-12 education technology market, supporting his price objective of $30 based on the anticipated enterprise value to EBITDA ratio.
Furthermore, Ikeda sees promise in PowerSchool’s early investment in artificial intelligence products, which are well-received in initial launches and beta testing. These new AI features, including PowerBuddy and ContentNav, have the potential to create substantial cross-selling opportunities and are not yet factored into the company’s guidance, presenting a chance for future financial outperformance. In addition to the AI prospects, the report highlights other positive aspects such as accelerated annual recurring revenue growth, billing growth, and an impressive adjusted EBITDA margin. These strengths, alongside the robust growth in the international segment, reinforce Ikeda’s Buy rating.
Ikeda covers the Technology sector, focusing on stocks such as Elastic, Dynatrace, and Datadog. According to TipRanks, Ikeda has an average return of 20.0% and a 67.03% success rate on recommended stocks.
In another report released today, Barclays also assigned a Buy rating to the stock with a $28.00 price target.
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PowerSchool (PWSC) Company Description:
PowerSchool Holdings Inc is a provider of cloud-based software to the K-12 education market. Its cloud-based technology platform helps schools and districts efficiently manage state reporting and related compliance, special education, finance, HR, talent, registration, attendance, funding, learning, instruction, grading, college and career readiness, assessments, and analytics in one place. The company earns revenue from subscription offerings, perpetual software licenses, maintenance and support services, and professional services.
Read More on PWSC:
- PWSC Upcoming Earnings Report: What to Expect?
- PowerSchool acquires Allovue, terms not disclosed
- Rocket Online Schools selects PowerSchool Student Information Cloud
- River East Transcona School Division taps PowerSchool to modernize processes
- PowerSchool price target lowered to $29 from $30 at Cantor Fitzgerald
