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2U Delivers Q2 Loss, Revenues Beat Estimates

2U, Inc. (TWOU) reported a larger-than-expected loss in the second quarter of 2021 but beat revenue expectations of $233.3 million.

Revenue generated in the quarter was $237.2 million, which grew 30% from the year-ago period.

Following the announcement, shares of the educational technology company declined 1.3% in Thursday’s extended trading session.

The company incurred a loss of $0.29 per share in Q2, compared to the $0.16 loss per share estimated by analysts. A loss of $1.03 per share was reported in the same quarter last year.

2U CEO Christopher “Chip” Paucek said, “As we work to close our recently announced edX acquisition, we are excited and energized by the opportunities it creates to expand access to affordable, high-quality online education globally and to deliver greater value for all of our stakeholders.” (See TWOU stock charts on TipRanks)

For 2021, the company reaffirmed its guidance and expects revenues in the range of $925 million to $955 million, reflecting growth of 19% – 23%.

On July 26, Needham analyst Ryan MacDonald reiterated a Buy rating on the stock with a price target of $61 (32.7% upside potential).  

Commenting on the recent edX acquisition MacDonald stated that “over the next 24 months, the combination is expected to result in 10%-15% of annual marketing cost efficiencies as well as be accretive to adjusted EBITDA in FY23, as cost efficiencies flow directly to 2U’s bottom line.”      

Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average TWOU price target of $60.50 implies 31.6% upside potential from current levels. Shares have gained 4.8% over the past year.

TipRanks data shows that financial blogger opinions are 87% Bullish on TWOU, compared to a sector average of 69%.

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