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Investing.com - William Blair initiated coverage on McGraw Hill (NYSE:MH) with an Outperform rating on Monday, as the stock trades near its 52-week low of $12.55.
The research firm highlighted McGraw Hill’s strong financial performance, noting the company generated an 80% gross margin with 35% EBITDA margin in fiscal 2025, while continuing to invest in growth initiatives. According to InvestingPro data, the company maintains impressive gross profit margins of 80.11% in the last twelve months.
William Blair emphasized that McGraw Hill’s free cash flow benefits from upfront cash payments for multiyear core contracts in the K-12 segment, which often span 5-8 years.
The firm pointed out that McGraw Hill shares currently trade at 8.0 times forward EBITDA and have declined 28% since its IPO, while the S&P 500 has gained 2% over the same period.
William Blair identified several risks for McGraw Hill, including competition, education policy and funding changes, seasonality and year-over-year volatility, high leverage at 3.6 times pro forma, low float, and private equity sponsor holding voting control.
In other recent news, McGraw Hill has seen several analyst firms initiate coverage with positive ratings, highlighting the company’s strong position in the education sector. BTIG initiated coverage with a Buy rating, emphasizing McGraw Hill’s transformation into a digital-first business with significant recurring revenue and a substantial Remaining Performance Obligation of $1.7 billion. Morgan Stanley (NYSE:MS) also initiated coverage, assigning an Overweight rating and noting McGraw Hill’s leading role in the $30 billion education content market. Rothschild Redburn provided a Buy rating, projecting a 115% potential upside and recognizing McGraw Hill’s leadership in the digital transformation of the education sector. Deutsche Bank (ETR:DBKGn) initiated coverage with a Buy rating, citing the company’s potential in AI and its global reach across various educational segments. Additionally, BMO Capital assigned an Outperform rating, acknowledging McGraw Hill’s leadership across preK-12, higher education, and professional learning solutions. These developments underscore the positive sentiment among analysts regarding McGraw Hill’s strategic positioning and growth prospects.
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