Analyst Toni Kaplan from Morgan Stanley maintained a Buy rating on KinderCare Learning Companies Inc (KLC – Research Report) and decreased the price target to $19.00 from $21.00.
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Toni Kaplan has given his Buy rating due to a combination of factors that highlight KinderCare Learning Companies Inc’s strong financial performance despite some challenges. The company’s adjusted EBITDA and EPS significantly surpassed expectations, with EBITDA margins exceeding projections by approximately 200 basis points, leading to a notable earnings per share beat. This financial strength underscores the company’s effective expense management, which has been a key driver of its profitability.
Despite a slight revenue miss attributed to lower enrollments, particularly in infant categories, management remains optimistic about future growth. They have maintained their full-year guidance, expecting flat enrollment with potential for slight improvement in conversion rates. The company also anticipates a 1-2% growth algorithm in the mid-term. These factors, combined with the management’s confidence and strategic outlook, support the Buy rating.
In another report released today, Barclays also maintained a Buy rating on the stock with a $20.00 price target.