On Wednesday, Barclays (LON:BARC) initiated coverage on Springer Nature AG (SPG:GR), assigning an Overweight rating to the academic publisher's stock along with a price target of €30.00. The industry's resilience was a key point in the firm's assessment, citing that academic publishing has not experienced negative organic growth during any of the recent major economic downturns.
The firm's analysis suggests that the academic publishing industry is set to see approximately 3-3.5% revenue growth. This forecast is based on factors such as an estimated 2% growth in university library budgets and mid-single-digit growth in higher education research and development spending. Barclays highlighted the stability provided by multi-year subscription models, which they believe will support publishers in maintaining a growth rate of 3% or higher.
Springer Nature is expected to potentially outperform the industry's growth rate. Barclays anticipates that the publisher could achieve 3.5-4.0% group organic revenue growth, slightly ahead of the industry average, and also expects a modest improvement in margins as indicated by the company's guidance.
The positive outlook is further supported by the strong performance of Nature journals and the continued expansion of fully open access journals. While the firm sees potential for growth in the journals segment, it also notes some uncertainty in the K-12 content and pharmaceutical communications sectors, which together represent 10% of Springer Nature's group revenue.
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