Street Calls of the Week
COLUMBUS, Ohio - McGraw Hill (NYSE:MH), an education technology company with impressive gross profit margins of 80%, announced Tuesday the launch of Sharpen Advantage, a new AI-powered enterprise offering that expands the company’s Sharpen study app into a customized solution for higher education institutions. According to InvestingPro analysis, the company’s stock is currently trading below its Fair Value, suggesting potential upside opportunity despite recent market challenges.
The platform provides faculty and administrators with tools to create personalized learning experiences delivered through students’ mobile devices. The system includes features that allow educators to measure student progress, curate content, and develop custom learning materials. This initiative comes as McGraw Hill maintains steady revenue growth of 6.65% over the last twelve months, demonstrating the company’s commitment to digital transformation.
Sharpen Advantage incorporates several AI-driven components, including "Ask Sharpen," which enables students to ask questions or upload notes to generate study support, and "Radar," a dashboard providing real-time insights into student learning patterns and performance.
"While we know artificial intelligence has changed how students access information, the challenge for higher education institutions is ensuring this technology is being used in a way that drives improved educational outcomes," said David Cortese, Chief Digital Information Officer at McGraw Hill, in the press release.
The platform also includes "Creator," allowing institutions to develop custom content, and "Playlists," enabling instructors to curate learning activities that can be shared directly to students’ devices.
According to the company, the original Sharpen study app has been downloaded by more than one million learners since its introduction in 2022. The enterprise version is now available to higher education institutions.
McGraw Hill describes the system as having academic-specific safety guardrails, primarily drawing from Sharpen’s content library or materials uploaded by students or institutions.
The company stated that the platform aims to address challenges in student engagement while providing educators with visibility into performance metrics to potentially improve retention and academic success. With analysts forecasting profitability this year and net income growth ahead, McGraw Hill appears positioned for potential growth. InvestingPro subscribers can access additional insights, including 6 more ProTips and detailed financial metrics that provide a comprehensive view of the company’s prospects.
In other recent news, McGraw Hill has completed a repricing of its Credit Agreement, reducing the interest rate by 50 basis points. This adjustment lowers the rate from Term SOFR plus 3.25% to Term SOFR plus 2.75%, with a potential for further reduction if certain credit ratings are maintained. Additionally, McGraw Hill’s recent initial public offering (IPO) raised approximately $386 million, which was used to pay down part of its $1.2 billion term loan. Following the IPO, Moody’s upgraded the company’s outlook to positive, affirming its B2 Corporate Family Rating.
BMO Capital has raised its price target for McGraw Hill to $25, maintaining an Outperform rating, despite the impact of recent artificial intelligence developments on the company’s shares. Macquarie and William Blair have both initiated coverage on McGraw Hill with Outperform ratings, citing the company’s strong market position and financial performance. William Blair specifically noted McGraw Hill’s impressive 80% gross margin and 35% EBITDA margin in fiscal 2025. These developments highlight the company’s ongoing efforts to strengthen its financial standing and market presence.
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