Analyst Brent Thill of Jefferies maintained a Buy rating on PowerSchool (PWSC – Research Report), retaining the price target of $30.00.
Brent Thill has given his Buy rating due to a combination of factors concerning PowerSchool’s current market position and future financial prospects. Despite recent concerns raised by a short report from Spruce Point, Thill assesses these concerns as exaggerated and sees the resulting dip in stock price as a favorable opportunity for investors. He acknowledges the apprehensions about the impending ESSER funding drop-off and the potential effects of private equity influence, but he suggests that these issues are already factored into market expectations, thus limiting their surprise impact on the stock’s performance.
Furthermore, Thill underscores his position by pointing to PowerSchool’s valuation metrics, which he finds compelling. With an attractive valuation at approximately 4.5 times the forecasted FY25 revenue and around 13 times the forecasted FY25 EBITDA—both of which he considers to be at a low point—Thill perceives PowerSchool as an appealing investment. He is particularly encouraged by the company’s robust growth outlook, anticipating over 10% revenue growth alongside impressive adjusted EBITDA margins exceeding 30%, framing PowerSchool as a ‘rule-of-50’ story where the sum of growth rate and EBITDA margin exceeds 50%, a benchmark for high-performing companies in the sector.
In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $28.00 price target.
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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