Needham analyst Ryan MacDonald reiterated a Buy rating and $28 price target on Chegg Inc CHGG after the company put up a solid topline beat bolstered by an impressive level of leverage in the model that he expects will flow through into 4Q22 & FY23.
Chegg delivered an inline subs quarter with an upside driven by price increases & higher Study Pack take rates.
The analyst thinks investor concerns about enrollment-related churn have lessened, and international localization initiatives remain an attractive growth lever for FY23. The shares remain attractive, given the expectation for growth acceleration and margin expansion.
Morgan Stanley analyst Josh Baer maintained Chegg with an Equal-Weight and raised the price target from $22 to $24.
Baer highlights that Chegg is building back investor confidence after a second straight beat and raising quarter on both the top and bottom line. However, that organic growth remains challenging.
The trends in U.S. undergraduate enrollment appear to have stabilized and returned to pre-pandemic levels. From a modest price increase in the base product, ARPU shows no adverse impact and drives more adoption of the higher-priced Study Pack bundle.
A Spanish language app in beta could help support future growth internationally.
Raymond James analyst Brian Peterson maintained Market Perform following 3Q22 results that topped his expectations and marked another step in the right direction following some prior shortfalls in revenue.
Positively, higher-ed enrollment trends have stabilized, while Chegg’s recent pricing initiative met with little customer resistance. The analyst was also encouraged by the significant profitability upside this quarter, with Chegg delivering healthy FCF margins.
Barrington Research analyst Alexander Paris maintained an Outperform and raised the price target from $25 to $30.
Price Action: CHGG shares traded higher by 21.4% at $25.63 on the last check Wednesday.
Image and article originally from www.benzinga.com. Read the original article here.