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TYPO BELOW....................
Gibson said: "The daily chart shows that Reckitt shares have been in a rising trend channel since this time last year, with the floor of the channel currently running through 3,600p. "While there is no end of day close back below the late 2011 uptrend line, we expect 3,900p to be hit at the turn of the year." Shares were trading down 0.67% at 3,725p in morning trade on Monday, though are still up over 1.5% over the last week.
Pearson: Jefferies maintains hold rating and 1,265p target; JPMorgan Cazenove cuts target from 1,530p to 1,490p, overweight rating kept.
Investec has maintained its 'hold' rating and 1,240p target price for publishing group Pearson, saying that the possible merger between Penguin and Random House is 'not a game changer'. Investec analyst Steve Liechti notes that this follows speculation in the summer but nothing since has followed. He said: "We view this as a possible net positive but not a game changer - while we see some EPS upside via near-term merger/cost synergies in a pressured top line business, this does not imply cash returns to shareholders or re-investment in long-term growth Education assets."
Will Ethridge, CEO of Pearson North America, said, "The acquisition of EmbanetCompass extends Pearson's investment in two areas where we see great opportunities for growth and impact-online education and educational services. The combination of Pearson and EmbanetCompass creates the premier provider of online learning and education services and will further enable us to advance the goals of the institutions and students we serve with innovative and proven programs." Founded in 1995, with locations in Chicago, Orlando, and Toronto, EmbanetCompass has 580 employees and is headed by Steve Fireng. He will stay on as CEO of EmbanetCompass and as a senior executive at Pearson. Steve Fireng said, "In the next five years, we expect nearly 4 million fully online learners will be in this market," said Steve Fireng, EmbanetCompass President and CEO. "By joining Pearson, the world's premier provider of educational content, programs, services and platforms, EmbanetCompass has a tremendous opportunity to strengthen our relationships with academic partners, expand programs and services at our current academic partners, and continue to expand into new exciting markets both domestically and around the globe."
PEARSON ACQUIRES EMBANETCOMPASS: EXPANDS CAPACITY AND EXTENDS LEADERSHIP IN FAST-GROWING MARKET FOR ONLINE LEARNING Pearson, the world's leading learning company, is announcing today the acquisition of EmbanetCompass from an investor group led by Technology Crossover Ventures and Knowledge Universe, for $650m in cash. EmbanetCompass partners with leading non-profit colleges and universities in North America to provide fully online learning solutions for more than 100 university programmes. It provides a full range of services including: programme design and development, marketing and student recruitment, faculty training and support, data-driven student retention and learning analytics; student services (counselling, tutoring, mentoring), technology support and launch funding. Institutional services are one of the fastest growing areas of the US higher education market. Out of 6,700 degree-granting institutions in the US, approximately 175 institutions engage third-party vendors to power online programmes. Of a total post-secondary student population of 22 million, 2.5 million participate in purely online programmes with over 6 million taking at least one online course. Pearson believes the number of students learning online and the number of institutions serving those students will grow rapidly, as academic institutions seek low-risk and cost-effective ways to better serve new and existing customers by boosting student access, affordability, achievement and retention. EmbanetCompass revenues have grown strongly in each of the last three years and are expected to be approximately $130m in 2012. The transaction is subject to a Hart-Scott-Rodino review. Pearson expects the acquisition to enhance adjusted earnings per share and to generate a return on invested capital above Pearson's weighted average cost of capital from 2014. For Pearson, the acquisition builds on and broadens our leading position in the fast-growing online educational services market established through our partnerships with institutions such as Arizona State University, California State University Online (CSU Online) and the community college systems in West Virginia, Kentucky, Tennessee, Iowa and Colorado. It also makes our content businesses more valuable and brings the opportunity to apply EmbanetCompass skills and technologies in new segments and geographic markets. It extends Pearson's investment in education services and technologies that have both a direct connection with the learner and a strong record of enhancing student achievement helped by data analytics.
http://www.investegate.co.uk/Article.aspx?id=201210161620538355O
Nomura comments this morning on Pearson’s acquisition of Embanet for $650m dollars (£406m), or five times sales, calling attention to the similarities between Embanet and the Deltak business acquired recently by John Wiley for $220m (4x sales). Furthermore, its analysts highlight how –in their opinion: “the business provides more scale to Pearson’s existing college solutions business (e.g., Arizona State and Calstate), and allows the company to capture more of the college’s value chain without the significant working capital in books.” Nomura adds that: “There will be some accretion in fiscal year 2013 but limited by integration charges. We estimate a 0.5% boost to organic growth. To reach targets, we estimate the revenue growth will have to be over 50% in fiscal year 2013 and circa 25% in fiscal year 2014, which poses some execution challenges. Post-acquisition valuation remains high and free-cash flow (FCF) around 7-8%.” Following on from the above, Nomura has raised its price target to 1,250p from 1,200p, while maintaining its reduce rating.
Automatic spending cuts at the federal level are slated for 1 January 2013 so the chances that emergency central government relief, such as the American Recovery and Reinvestment Act of 2009, will keep filling state budget shortfalls are receding. Further and deeper US schools spending cuts seem inevitable and The Parthenon Group forecasts 2012 will be the first of three consecutive years of education spending drops.
US school spending cuts this year and next are likely to weigh heavily on Pearson (PSON) and the £10 billion cap sector giant looks too highly rated given the challenges which face its core American education publishing operations. According to consensus, Pearson will generate 84.7p of earnings per share (EPS) in 2012, a mere 1% year-on-year increase. A prospective price/earnings ratio of 14.6 looks too rich, despite solid long-term prospects for high-quality earnings from a growing digital product suite. Pearson generated 44% of last year's sales from its North American education division. Up until now it has been able to offset weakness in the schools and university textbook market through sales of digital teaching products. In 2011 underlying sales at the division fell 1%, an outperformance of the wider market as the company took digital share. As the key 'K-12' segment now faces severe budget uncertainty, Pearson may now struggle to further sell new digital products as clients need to make upfront investments first. The schools market is principally funded at the state level and by locally elected school boards. Neither is in good financial health as they are reliant on tax revenues, where government revenues from sales and property levies are in decline.
Pearson: Exane BNP Paribas upgrades to outperform, 1,450p target kept. Panmure Gordon keeps hold rating and 1,300p target.
Pearson, the FTSE 100 education and publishing firm which labels itself as a 'leading learning company', has announced that its Chief Executive Officer (CEO) Marjorie Scardino has decided to call it quits at the end of the year. Having led the firm since January 1997, Scardino is one of the FTSE 100's longest-serving CEOs. She is also the Chairman of the MacArthur Foundation, Vice Chairman of Nokia and a director of Oxfam. Glen Moreno, Pearson's Chairman, said: "Under Marjorie's leadership, Pearson has fundamentally shifted its business portfolio towards all kinds of learning, its geographic exposure towards fast-growing economies and its product mix towards digital and services. It has been a radical and highly successful transformation. "I know that many of Pearson's shareholders, customers and people will join me today in applauding her enormous contribution to the company," he said. She will be replaced by the CEO of Pearson's International Education division John Fallon. He has held that position since 2008 and before that was the head of the Europe, Middle East and Africa unit since 2003. The company said in a statement on Wednesday that, under Fallon's leadership, International Education sales have increased from £322m to £1.4bn and profits from £12m to almost £200m in the past decade. Incoming frontman Fallon commented: "Marjorie's legacy is a company with a strong performance record, a deep commitment to its wider social purpose and a unique culture. I am proud to be part of the company; it is a tremendous honour and responsibility to be asked to lead it.
How strange, very strange. I have just posted to you on the SCLP board. Please read it. Only looked here as it was the only message other than mine around. Wow how weird x
Exane BNP Paribas has upgraded Pearson to outperform from neutral, citing growth opportunities at the group’s Education department, seeing the group “as a key beneficiary from the move to digital learning.” The French bank expects Pearson, a multinational publishing and education company based in London, to offer EPS growth of 12% in 2013 and 9% in 2014, beating the consensus figures easily. The bank also increases its target price for Pearson's shares from 1210p to 1450p. This is now the same as the target set by UBS which has reiterated its BUY recommendation for Pearson. P.S. Here's some links about SCLP, one of the hottest stocks at the moment: http://www.euroinvestor.com/community/discussionthread.aspx?iid=2467508&threadid=256596&mode=2 http://www.euroinvestor.com/community/discussionthread.aspx?iid=2467508&threadid=255276&mode=2 http://www.euroinvestor.com/community/discussionthread.aspx?iid=2467508&threadid=257550&mode=2
and another one Pearson Sell 31-Jul-12 £155,602.07 John Makinson 13,032 @ 1,194.00p
Pearson Sell 31-Jul-12 £204,747.11 Will Ethridge 17,148 @ 1,194.00p Pearson Sell 31-Jul-12 £194,490.65 Rona A Fairhead 16,289 @ 1,194.00p Pearson Sell 31-Jul-12 £187,565.45 Robin Freestone 15,709 @ 1,194.00p
Publishing group Pearson was a heavy faller on Monday, extending its losses following its first-half results on Friday. Sentiment has been dampened today after Nomura reiterated its 'reduce' rating on the stock, saying that shares are 'richly priced'. The broker noted in a research report that group organic growth was just 0.6% in the first six months of the year, "unfeasibly low" given that the shares are trading at 14.4 times earnings. The broker has maintained its 1,200p target price on the stock.
Positive Points: Pearson said its digital services were strong, with registration to its Education digital platform rising 30%. Penguin ebook revenues grew 33% and digital subscription at the Financial Times rose 31% and now exceed print circulation. Trading is currently in line with prior expectations, with progress for the full year 2012 expected. Pearson enjoys strong global market positions. It is both the largest education company and the largest book publisher in the world. Pearson has over recent years made acquisitions in Brazil, China, South Africa, Nigeria and India. The board has previously highlighted that it was “benefiting from recent portfolio changes, using the proceeds from disposals to invest in fast-growing businesses in developing economies and digital services." The group's dividend policy remains progressive.
Negative Points: Pearson had warned in April that its adjusted operating profit would be down in the first half of 2012, due to seasonal effects, as it gets the bulk of its revenue in the second half of the year. Sales at Penguin dropped 4%, with profits falling 48% to £22 million, which management said was caused by lower sales in its more profitable U.S. market. Uncertainty over potential national and local government spending cuts in the US continues to cast a shadow over the group's Education business. The weak state of the physical retail book market is a risk to the publishing industry. The outlook for advertising markets, (for the Financial Times) remains subject to macro-economic conditions. Currency volatility can work both for and against the company. With the group generating approximately 60% of its sales in the US, the movement between the pound and the dollar remains significant.
Financial Highlights: Interim pre-tax profits fell 38% to £59 million. The group reported a rise in revenues in the six months to 30 June from £2.4 billion to £2.6 billion. The board recommended raising the interim dividend by 7% to 15p a share.
Half Year Results: Despite a difficult trading environment in the first half, Pearson reiterated that it was on course to meet its targets for full year sales and operating profits. Interim pre-tax profits fell 38% to £59 million, which Pearson attributed to the loss of profits from the December sale of its 50% stake in FTSE International, as well as the cyclical nature of Penguin's publishing schedule, and increased investment back into the business. The publishing group reported a 7% increase in first-half revenues from £2.4 billion to £2.6 billion, on the back of a strong performance from its education division.
Pearson is one of the world's major publishing groups, with a series of publishing brands (Penguin, Dorling Kindersley, the Financial Times, Prentice Hall, Scott Foresman, Longman and many others). The conglomerate is focused tightly on three core businesses: 1) Education 2) The Financial Times Group 3) Penguin Consumer Books. The group operates from 60 countries and has over 30,000 employees.
Pearson's shares dropped on Friday morning, with Jefferies saying that the publishing group's first-half results statement 'doesn't really tell us very much'. "Pearson deliver less than 20% of full year adjusted EPS [earnings per share] in H1, so the numbers are not that insightful," the broker said in a research note. "Reasonable sales performance, though trend operating profit and EPS growth rates appear to be stepping down - comparison to MHP [McGraw-Hill] and REL [Reed Elsevier] looks weaker."
OUTLOOK Our 2012 outlook is unchanged. In a challenging external environment with turbulent macroeconomic conditions and rapid structural industry change, we are making progress on our strategic goals of making Pearson more digital, more active in developing markets and more directly engaged in helping students succeed. We are reiterating our outlook and continue to expect Pearson to achieve growth in sales and operating profits in 2012. In addition, we expect our deferred revenue to rise and our working capital to sales ratio to show further improvement. Our 2012 results will reflect the sale of our 50% stake in FTSE International (which contributed no sales, £20m of operating profit and 2.2p of adjusted EPS in 2011) and higher tax rates (after one-off benefits in 2011). Margins will reflect integration costs on acquisitions made in 2011 and 2012 (which are expensed) and the FTSE sale. This guidance remains struck at £1:$1.59 exchange rates.
Marjorie Scardino, chief executive, said: "We began 2012 planning for a challenging external environment and our caution was well-placed: conditions have been tough in the early part of this year and, for a couple of parts of Pearson, tougher than expected. But that's precisely when our planning for structural change and our investments in growth markets show their power. We've kept up the pace of transformation, and continued our shift towards digital and services businesses, which this year for the first time will yield the majority of Pearson's revenues. That strategy will enable us to deliver on our long-term goals of expanding our market opportunity, delivering consistently strong financial performance and helping all kinds of students in all kinds of places to learn."