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Investing.com - Stifel has initiated coverage on McGraw Hill (NYSE:MH) with a Buy rating and a $19.00 price target on Monday, representing potential upside from the current price of $13.35.
The research firm identifies McGraw Hill as a leading educational content provider that has successfully transitioned from physical textbooks to primarily a digital platform-based business model. This transformation has helped maintain impressive gross profit margins of 80.1% and generate annual revenue of $2.1 billion.
McGraw Hill represents approximately 7% of a $30 billion total addressable market that is estimated to be growing in the low-single-digits, according to Stifel’s analysis.
Stifel characterizes McGraw Hill as a recession-resistant business with moderate mid-single-digit topline growth trajectory and K-12 clients that pay upfront on 5-8 year contracts.
The firm also notes McGraw Hill has further room for margin improvement, declining leverage following its IPO, and an experienced management team operating a prominent educational content brand. Based on InvestingPro’s Fair Value analysis, the stock currently appears slightly overvalued despite its recent decline near 52-week lows.
In other recent news, McGraw Hill reported first-quarter fiscal 2026 results that surpassed revenue expectations, with total revenue reaching $535.7 million, marking a 2.4% increase from the previous year. The growth was primarily driven by strong digital and recurring revenue. Goldman Sachs initiated coverage on McGraw Hill with a Buy rating and a price target of $27.00, emphasizing the company’s digital transformation, which has seen digital revenue rise to approximately 65% and is expected to exceed 75% in the long term. JPMorgan also initiated coverage with an Overweight rating and a $21.00 price target, highlighting McGraw Hill’s leadership in education solutions. Baird gave an Outperform rating with a $21.00 price target, noting the company’s attractive valuation based on future earnings estimates. Meanwhile, UBS initiated coverage with a Neutral rating and a $15.00 price target, citing the need for market share gains and strong execution in a challenging market. These developments reflect the varied perspectives of financial analysts on McGraw Hill’s current and future performance.
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