Chegg upgraded to Neutral at Goldman on ‘lack of absolute downside’

Goldman Sachs upgraded Chegg to Neutral from Sell with a price target of $3.75, down from $7, after Chegg produced revenue and adjusted EBITDA ahead of its guided ranges in Q2 and gave Q3 guidance that points to a revenue and adjusted EBITDA range about 10%-15% and 45%-50%, respectively, below firm and Street estimates. While the firm notes that it does not model adjusted EBITDA margin returning to above 30% in its assumptions, it contends that it “is now difficult to see an absolute downside in shares from current levels.”