Stride stock price target raised to $139 by BMO Capital

On Tuesday, BMO Capital Markets adjusted its outlook on Stride Inc. (NYSE: NYSE:LRN) shares, increasing the price target to $139 from the previous $134, while reiterating an Outperform rating on the stock. The upgrade comes as Stride demonstrates remarkable momentum, with the stock delivering a 100% return over the past year and trading near its current InvestingPro Fair Value. BMO Capital’s decision follows recent investor meetings with Stride’s Chief Financial Officer and Vice President of Investor Relations, where they discussed the key factors currently influencing the company’s performance.

The meetings covered various topics, including the secular drivers of Stride’s business, the political and macroeconomic environment, and its effects on the company. Despite a recent pullback in Stride’s stock price due to concerns over government funding and Department of Education news, BMO Capital suggests that the current lower stock price presents a buying opportunity for investors. InvestingPro data supports this view, highlighting Stride’s strong financial health with a "GREAT" overall score, robust cash flows, and a healthy current ratio of 6.02, indicating excellent liquidity.

BMO Capital believes that the concerns leading to the stock’s recent decline are largely without merit. As a result of the discussions and the firm’s analysis, the price target has been raised, signaling confidence in the company’s future performance and growth potential. This optimism is reflected in the broader analyst consensus, with multiple analysts revising their earnings estimates upward for the upcoming period. InvestingPro subscribers can access 13 additional key insights about Stride’s financial position and growth prospects through the comprehensive Pro Research Report.

The analyst’s commentary highlighted the belief in Stride’s strong position, "We recently hosted in-person investor meetings with LRN’s CFO and VP of Investor Relations. The discussion focused on current drivers of LRN’s business, the political and macroeconomic environment and its impact, among other areas. The stock has pulled back recently on government funding and Department of Education news flow, and we suggest investors take advantage of the drawdown, as we believe these are largely unfounded. We raise our target price to $139 (from $134)."

Stride Inc., known for its educational technology services, has been navigating the complex landscape of government policy and funding, which are critical to its operations and growth strategy. The company’s solid fundamentals are evident in its 13% revenue growth and impressive 38.5% gross margin over the last twelve months. With BMO Capital’s updated price target, investors may gain a renewed interest in the stock, looking past the recent concerns to focus on the company’s long-term prospects.

In other recent news, Stride Inc. reported strong financial performance for the second fiscal quarter of 2025, with earnings per share reaching $2.03, surpassing the forecasted $1.92. Revenue also exceeded expectations, coming in at $587.2 million compared to the anticipated $562.39 million. This positive outcome is attributed to robust enrollment growth, with student numbers reaching a record 230,000, reflecting a 19.4% increase from the previous year. BMO Capital Markets responded to these results by raising their price target for Stride to $134, maintaining an Outperform rating due to the company’s strong performance in both the General Education and Career Learning segments.

In addition, Canaccord Genuity raised Stride’s stock target to $145, maintaining a Buy rating. The firm highlighted Stride’s enrollment momentum and minimal reliance on federal funding, which accounts for less than 5% of the company’s total revenue. Meanwhile, Morgan Stanley (NYSE:MS) maintained an ’Equalweight’ rating with a $117 price target, downplaying market concerns about the potential shutdown of the Department of Education. They emphasized that the majority of K12 funding comes from state and local sources, mitigating the impact of federal changes.

Stride’s management has expressed optimism about continued enrollment growth and has raised its full-year revenue guidance to a range of $2.32-$2.355 billion. The company’s strategic initiatives, including the development of a standalone application funnel for Career Learning offerings, could further enhance its growth trajectory. These developments underscore Stride’s strong positioning in the education sector amid ongoing market dynamics.

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