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Investing.com - Goldman Sachs initiated coverage on McGraw Hill (NYSE:MH) with a Buy rating and a price target of $27.00 on Monday. The target represents significant upside from the current price of $13.35, with the stock trading near its 52-week low of $12.55.
The firm highlighted McGraw Hill’s ongoing digital transformation, noting digital revenue has increased from 35% in fiscal 2015 to approximately 65% currently, with expectations to reach over 75% long-term. InvestingPro data reveals impressive gross profit margins of 80.11%, supporting the company’s digital transition strategy.
Goldman Sachs believes this digital shift will enhance customer retention and revenue predictability by creating an AI-powered ecosystem for educational content serving both learners and instructors.
The research firm expects McGraw Hill to achieve mid-single-digit annual revenue growth, driven by increased K-12 capture rates through cross-selling and growing adoption of the Inclusive Access bulk purchase program in higher education.
Goldman Sachs also anticipates McGraw Hill’s EV/EBITDA multiple will expand as the company increases its digital revenue mix and reduces financial leverage, potentially converging with broader Information Services peers.
In other recent news, McGraw Hill reported first-quarter fiscal 2026 results that exceeded revenue expectations. The company achieved total revenue of $535.7 million, marking a 2.4% increase from the previous year. This growth was primarily driven by strong digital and recurring revenue performance. The company’s financial results were released on Thursday, highlighting its ongoing focus on digital expansion. Analyst firms have yet to provide new ratings or updates following this announcement. McGraw Hill’s recent performance underscores its strategy in leveraging digital platforms to bolster revenue. There were no significant mergers or acquisitions reported in conjunction with these results.
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