Chegg downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley analyst Josh Baer downgraded Chegg to Underweight from Equal Weight with a price target of $9, down from $10. The analyst says weaker third party party data trends and an “aggressive” implied Q4 subscriber addition outlook create a tough near-term setup for a stock that is up over 40% from the October lows. Longer term, challenges from generative artificial intelligence competition create a smaller opportunity for Chegg, likely leading to negative consensus estimate revisions in 2024 and 2025, the analyst tells investors in a research note.