Robert W. Baird analyst Joseph Vruwink maintained a Buy rating on PowerSchool (PWSC – Research Report) today and set a price target of $26.00.
Joseph Vruwink has given his Buy rating due to a combination of factors that consider the overall solidity of PowerSchool’s business model and its performance within the education technology sector. Despite a short report casting doubts on the company’s future due to potential shifts in educational spending and the end of ESSER stimulus, Vruwink believes that these risks are already known and factored into their analysis. He notes that PowerSchool’s retention rate is commendably high compared to sector averages, which suggests a durable customer base. Furthermore, PowerSchool’s Unified Classroom offering, a significant portion of the company’s Annual Recurring Revenue (ARR), could potentially sustain its growth even in a tighter spending environment, based on historical growth patterns.
Vruwink also addresses concerns raised in the short report regarding financial measures and the use of student data. He points out that the firm’s valuation emphasizes Free Cash Flow (FCF), which includes the effects of capitalized Research and Development (R&D), indicating a transparent approach to financial analysis. On the topic of student data privacy, he acknowledges the gravity of the allegations but anticipates that PowerSchool will address these claims. Overall, Vruwink’s assessment hinges on the belief that the company is well-positioned to navigate the challenges ahead and continue its growth trajectory, justifying the Buy rating.
Based on the recent corporate insider activity of 66 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PWSC in relation to earlier this year.
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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.
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