Last Update 09 Dec 25

LRN: Future Enrollment Will Recover As Platform Issues And Legal Headwinds Ease

Analysts have trimmed their price target on Stride to $125 from $175 and to $108 from $164, reflecting mixed recent results and concerns around a troubled platform rollout and a softer than expected fiscal 2026 outlook.

Analyst Commentary

Recent Street research reflects a more cautious stance on Stride, with price targets reset lower but views remaining divided on the company’s execution risk and long term growth potential.

Bullish Takeaways

Bullish analysts maintain positive ratings despite the reduced price targets. This suggests they still see upside from current levels as valuation has de risked.
Mixed quarterly results are viewed constructively. Revenue and profitability modestly exceeded consensus even as enrollment lagged expectations, which supports the resilience of the business model.
Strong application volumes during the enrollment period are cited as evidence of underlying demand for Stride’s offerings. This provides a foundation for future growth once platform issues are resolved.
The ongoing upgrade of learning and technology platforms is seen as a strategic investment. If successfully executed, it could enhance scalability and margins over the medium term.

Bearish Takeaways

Bearish analysts argue that the significantly reduced fiscal 2026 outlook signals elevated execution risk and a weaker near term growth trajectory than previously anticipated.
The troubled platform rollout, which led to higher than expected student withdrawals, raises concerns about management’s ability to implement major technology transitions without disrupting operations.
Restrictions on in year enrollment growth, introduced to mitigate further platform related issues, are viewed as a headwind for top line acceleration and limit potential upside to consensus estimates.
With fall enrollments serving as the key earnings catalyst, some see a lack of near term triggers for a rerating. This implies the stock could trade in a holding pattern until at least the next enrollment cycle.

What's in the News

Scott+Scott Attorneys at Law LLP has filed a securities class action in the Eastern District of Virginia alleging Stride misled investors on enrollment, staffing, compliance, and student outcomes, seeking damages for shareholders who bought during the alleged misrepresentation period (Key Developments).
The Gallup McKinley County Schools Board of Education has sued Stride in New Mexico, accusing the company of fraud, deceptive practices, retaining ghost students for funding, overloading teachers, and ignoring compliance and special education requirements, and is seeking compensatory, punitive, and triple damages plus restitution of taxpayer funds (Key Developments).
Stride's Board has authorized a new share repurchase plan, allowing the company to buy back up to $500 million of its stock through October 31, 2026. This is described as signaling management's confidence in long term value despite legal and operational headwinds (Key Developments).
The company issued updated guidance for the second quarter and full fiscal year 2026, projecting quarterly revenue of $620 million to $640 million and full year revenue of $2.48 billion to $2.555 billion. Management characterized this as reinforcing a slower but still growing topline trajectory (Key Developments).

Valuation Changes

Fair Value Estimate remains unchanged at approximately $115.50, indicating no material shift in intrinsic value despite updated assumptions.
Discount Rate has risen slightly from about 7.44% to 7.50%, reflecting a modest increase in the required return for Stride’s equity.
Revenue Growth Assumption is essentially unchanged, moving fractionally from roughly 4.23% to 4.23%, signaling a stable growth outlook.
Net Profit Margin Assumption is effectively flat, edging only marginally higher from about 16.06% to 16.06% in future projections.
Future P/E Multiple has increased very slightly from approximately 14.01x to 14.03x, implying only a minimal adjustment to valuation multiples.

Sustained demand for digital education and expanded tutoring services boost revenue opportunities and support long-term margin growth.
Investments in technology and strategic partnerships drive operational efficiency, reduce risk, and enhance market share.
Strict enrollment caps, political funding risks, underperforming career tech, slowing margin gains, and contract instability threaten Stride's ability to sustain reliable growth and earnings.

Catalysts

About Stride

A technology-based education service company, engages in the provision of proprietary and third-party online curriculum, software systems, and educational services in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Persistent double-digit enrollment growth and robust application volumes signal accelerating demand for flexible, digital, and alternative education offerings, implying sustainable revenue growth as families seek personalized, remote learning options.
Expansion of tutoring and career-focused learning solutions, both internally and as externally monetizable offerings, positions Stride to capture additional revenue streams amid rising emphasis on lifelong learning and workforce reskilling.
Ongoing investments in proprietary technology platforms-including AI and data-driven engagement tools-are expected to yield both educational outcomes and operational efficiencies, supporting further improvement in net margins.
Favorable funding environment, coupled with expanding and diversified state partnerships, enhances revenue predictability and geographic reach, while mitigating concentration risk and creating opportunities for scalable earnings growth.
Brand strength, increased customer referrals, and positive regulatory momentum toward school choice continue to reduce customer acquisition costs and amplify market share, likely benefiting future earnings and margin expansion.

Stride Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Stride's revenue will grow by 9.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 12.0% today to 16.7% in 3 years time.
Analysts expect earnings to reach $523.9 million (and earnings per share of $10.03) by about September 2028, up from $287.9 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.5x on those 2028 earnings, down from 24.8x today. This future PE is lower than the current PE for the US Consumer Services industry at 18.6x.
Analysts expect the number of shares outstanding to grow by 0.44% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.05%, as per the Simply Wall St company report.

Stride Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Stride's enrollment growth is partially constrained by regulatory and partner-imposed caps in some states, as well as the company's own intentional limit-setting to meet accountability standards-hindering the ability to fully convert rising demand into revenue and potentially restricting top-line growth.
Segments reliant on government funding remain exposed to political and state-level budget volatility, with flat or uneven funding increases across states; this creates unpredictability in revenue streams and earnings beyond FY '26 if budget environments worsen or school choice support weakens.
The company's Adult Learning (career tech) segment has underperformed and suffered demand declines, particularly in technology verticals; if this trend persists or worsens, it will drag on overall revenue growth and future earnings, especially as attempts to stabilize or revive the segment have yet to show clear success.
Stride's margin expansion is expected to slow due to increased investments in product (e.g., large-scale tutoring and engagement initiatives), reducing the pace of net margin and profit growth and putting pressure on earnings leverage as scale-driven efficiency gains moderate.
Ongoing risk of contract loss or client turnover-due to regulatory, partner, or reputational challenges-creates periodic enrollment and revenue "holes" that must be filled; while recent recoveries (e.g., New Mexico) were successful, there is no guarantee this will always be the case, particularly if public or political sentiment shifts against online education, negatively impacting both enrollment growth and earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $163.75 for Stride based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $523.9 million, and it would be trading on a PE ratio of 16.5x, assuming you use a discount rate of 7.1%.
Given the current share price of $166.11, the analyst price target of $163.75 is 1.4% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Digital Education Will Drive Opportunities Despite Recent Lawsuit and Operational Challenges