BMO raises Adtalem stock price target to $115, maintains Outperform

On Monday, BMO Capital Markets expressed a positive outlook on Adtalem Global Education (NYSE:ATGE), as analyst Jeffrey Silber increased the company’s price target from $108.00 to $115.00. The firm sustained its Outperform rating on the education provider’s shares. According to InvestingPro data, ATGE has delivered impressive returns, with a 121.39% gain over the past year and a perfect Piotroski Score of 9, indicating strong financial health.

Adtalem’s recent financial performance exceeded expectations, with both revenue and earnings surpassing forecasts. The company reported accelerated enrollment growth, primarily attributed to its Chamberlain University, where marketing strategies have proven efficient. Adjusted EBITDA margins expanded by 440 basis points year-over-year, even as marketing expenses remained relatively consistent at Chamberlain due to heightened spending in the first quarter of fiscal year 2025. InvestingPro analysis shows the company maintains strong profitability with a 56.72% gross margin and operates with a moderate debt-to-equity ratio of 0.6.

In light of these results, Adtalem has revised its financial guidance for fiscal year 2025 upwards. The company now anticipates approximately a 2% increase in revenue and a 6% rise in adjusted earnings per share. Additionally, Adtalem expects to see an expansion of more than 100 basis points in its adjusted EBITDA margin.

Silber’s statement highlighted the company’s consistent performance and optimistic future, "ATGE beat expectations again on both the top- and bottom-line. Enrollment growth accelerated once again, mostly driven by Chamberlain where management cited marketing efficiencies. Adjusted EBITDA margins rose +440bp y/y, though marketing was flattish (y/y) at Chamberlain given enhanced spending in F1Q25. FY2025 revenue guidance was raised roughly 2%, while adjusted EPS guidance was raised roughly 6% with ’greater than 100 bps’ adjusted EBITDA margin expansion expected. We once again raise our estimates/target (to $115)."

The upward revision in Adtalem’s price target reflects BMO Capital’s confidence in the company’s growth trajectory and its ability to sustain and build upon its recent financial achievements. InvestingPro subscribers can access 13 additional ProTips and comprehensive analysis through the Pro Research Report, which provides detailed insights into ATGE’s valuation, financial health, and growth prospects. The stock currently shows an overall "GREAT" financial health score of 3.45 out of 5, though InvestingPro’s Fair Value analysis suggests the stock may be trading above its intrinsic value.

In other recent news, Adtalem Global Education Inc. reported robust financial results for the fourth quarter of 2024, surpassing analysts’ expectations with an earnings per share (EPS) of $1.81 against a forecast of $1.38. Revenue reached $447.7 million, exceeding the anticipated $416.26 million. The company’s financial health score is rated as "GREAT" by InvestingPro, demonstrating strong operational efficiency with a gross margin of 56.7%. Despite these positive results, the company’s stock fell 1.76% in after-hours trading.

Adtalem’s performance in Q4 2024 was significantly driven by its healthcare education institutions. Enrollment at Chamberlain University grew by 11.5%, while Walden University saw a 13.2% increase. These growth rates reflect Adtalem’s strategic focus on expanding its educational offerings and improving student outcomes, positioning the company favorably amidst ongoing demand for healthcare professionals.

Adtalem’s Q4 2024 results surpassed expectations, with EPS beating forecasts by 31.2% and revenue exceeding projections by 7.6%. In light of these results, Adtalem raised its full-year revenue guidance to between $1.73 billion and $1.76 billion, representing a growth of 9-11%. The company also increased its adjusted EPS guidance to $6.10-$6.30, indicating anticipated growth of 21.5-25.5%.

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