Scholastic stock initiated with Buy rating by B.Riley on brand strength

Investing.com - Scholastic Corp (NASDAQ:SCHL) received a new Buy rating from B.Riley on Wednesday, with analyst Drew Crum setting a $37.00 price target for the educational publisher. According to InvestingPro data, the stock currently trades at $25.28, with analysis suggesting it’s trading below Fair Value.

B.Riley cited Scholastic’s "powerful brand and longstanding relationships with key constituents, diverse portfolio of content IP, and unique school-based distribution channels" as factors supporting the positive outlook. The company has maintained dividend payments for 18 consecutive years, currently offering a 3.16% yield.

The firm projects improving profitability with adjusted EBITDA reaching $165 million in fiscal year 2026 and $185 million in fiscal year 2027, representing meaningful upside from the fiscal year 2024 low of $137 million.

Key drivers for this growth include segment realignment initiatives, particularly for Education Solutions, cost savings measures, and operating leverage, which B.Riley describes as "a proactive approach that we are not sure the prior management team would have undertaken."

B.Riley also highlighted potential real estate transactions possibly occurring in early to mid-fourth quarter of 2025 as a catalyst that could "unlock value trapped on the balance sheet," noting the stock is currently trading near tangible book value, a level the firm considers "deep value." This aligns with InvestingPro data showing the stock trading at a price-to-book ratio of 0.67.

In other recent news, Scholastic Corporation reported its fourth-quarter 2025 earnings, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $0.87, slightly above the forecasted $0.85. Additionally, Scholastic reported revenue of $508.3 million, exceeding the anticipated $494.59 million. These results come amid market challenges, highlighting a positive performance for the quarter. Despite the positive earnings report, it’s noted that the stock experienced a decline in regular trading, though it saw a slight increase in aftermarket trading. The company’s ability to exceed both earnings and revenue forecasts demonstrates resilience in a challenging market environment. Investors and analysts may keep a close watch on Scholastic’s future performance given these recent developments.

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