LRN: Future Enrollment Should Recover as Platform Issues Are Resolved

The analyst price target for Stride was reduced from $170.75 to $115.50, as analysts highlighted lower growth expectations and concerns over platform implementation challenges, which are impacting future enrollment and outlook.

Analyst Commentary

Recent analyst reports provided a mixed assessment of Stride’s current outlook, highlighting both positive and negative factors affecting the company’s valuation and growth potential.

Bullish Takeaways

• Total revenue and profitability for the recent quarter modestly exceeded consensus estimates. This reflects underlying business resilience.
• Application volumes remained strong throughout the enrollment period, suggesting continued demand for Stride’s offerings despite current challenges.
• Bullish analysts maintain a buy rating and express confidence that improvements in tech platforms could ultimately support future enrollment growth once implementation hurdles are resolved.

Bearish Takeaways

• The company’s fiscal 2026 outlook fell well below consensus expectations, which led to a meaningful reduction in target price.
• A significant platform upgrade encountered implementation challenges, resulting in higher than expected student withdrawals and affecting short-term enrollment growth.
• Management is proactively limiting in-year enrollment growth in response to these issues. This may delay potential catalysts until next enrollment cycles.
• Execution risks remain elevated. Future growth depends on resolving platform and operational challenges to regain market momentum.

What's in the News

• Stride, Inc. has announced a share repurchase program, allowing up to $500 million worth of its shares to be bought back through October 31, 2026. (Key Developments)
• The Board of Directors authorized a new buyback plan, with the program scheduled to begin November 3, 2025. (Key Developments)
• Stride, Inc. issued earnings guidance for fiscal year 2026, expecting revenue between $2.480 billion and $2.555 billion and second quarter revenue between $620 million and $640 million. (Key Developments)
• The Gallup-McKinley County Schools Board of Education filed a lawsuit against Stride, Inc., alleging fraud, deceptive trade practices, and systemic violations of law that negatively impacted Native American students, citing dramatically reduced graduation rates and loss of public trust. (Key Developments)

Valuation Changes

• Consensus Analyst Price Target has fallen significantly from $170.75 to $115.50, reflecting lowered expectations for future growth.
• The discount rate has risen slightly from 7.15 percent to 7.41 percent, indicating a modest increase in perceived risk.
• Revenue growth estimates have dropped sharply, from 9.50 percent to 4.23 percent.
• Net profit margin projections decreased modestly, from 16.75 percent to 16.06 percent.
• The future P/E multiple has declined from 17.08x to 13.99x, suggesting the market anticipates lower earnings growth.