On Thursday, BMO Capital Markets updated its outlook on Laureate Education Inc (NASDAQ: NASDAQ:LAUR) stock, increasing the price target from $17.00 to $20.00, while retaining an Outperform rating. The adjustment follows Laureate Education's report of an adjusted EBITDA that surpassed expectations, primarily due to performance improvements in Peru, along with certain timing advantages.
The analyst from BMO Capital highlighted that the positive results in the quarterly earnings were largely influenced by the situation in Peru. The country's anticipated economic recovery from recession could lead to even stronger performance in 2025, potentially outshining the 2024 results. However, the analyst also noted potential challenges in Mexico, such as weaker new enrollments and foreign exchange (f/x) pressures based on current spot rates.
The recent educational initiatives proposed by the new president of Mexico are expected to introduce some degree of volatility in the market. These policy changes could potentially impact Laureate Education's operations in the country.
In response to the expected foreign exchange headwinds in Mexico, BMO Capital has made adjustments to its estimates for Laureate Education. Despite these concerns, the firm has raised its price target for the education company's stock. This decision reflects a calculated response to the company's financial performance and the broader economic context in which it operates, with particular attention to the contrasting prospects in Peru and Mexico.
In other recent news, Laureate Education, Inc. has initiated a new stock repurchase program, allowing for the buyback of up to $100 million of its common stock. This follows a similar $100 million stock buyback completed in early 2024. The company's strategy of returning capital to shareholders, which has amounted to nearly $3 billion since 2019, will be continued through this initiative.
In addition to this, Laureate Education reported a strong operational performance for the second quarter of 2024 and has maintained its full-year revenue and adjusted EBITDA guidance for the year. The company has seen revenue and adjusted EBITDA growth in both Mexico and Peru. It's worth noting that Laureate plans further product innovation and campus expansions in these growing markets.
These are recent developments for Laureate Education, with the company's board of directors maintaining oversight of the repurchase program, and the ability to alter, suspend, or discontinue it as needed. The company's press release includes forward-looking statements that are subject to risks and uncertainties, and actual results may differ from current expectations. These statements are not guarantees of future performance and are based on current assumptions.
InvestingPro Insights
Laureate Education's recent performance aligns with several InvestingPro metrics and tips, offering additional context to BMO Capital's analysis. The company's P/E ratio of 13.83 and adjusted P/E ratio of 11.77 for the last twelve months as of Q2 2024 suggest that the stock is trading at a relatively low valuation compared to its earnings. This is further supported by an InvestingPro Tip indicating that Laureate is "trading at a low P/E ratio relative to near-term earnings growth."
The company's revenue growth of 13.59% over the last twelve months and 8.05% in Q2 2024 reflects its strong performance, particularly in markets like Peru, as mentioned in the article. Additionally, Laureate's EBITDA growth of 13.56% in the same period corroborates the analyst's positive outlook on the company's financial health.
Another InvestingPro Tip notes that Laureate "operates with a moderate level of debt," which could be advantageous in navigating potential challenges in Mexico and capitalizing on opportunities in Peru. The company's ability to generate strong returns is evident from its 15.98% one-year price total return and the InvestingPro Tip highlighting its "strong return over the last five years."
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Laureate Education's financial position and growth prospects.
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