2U Can Yield 20% EBITDA Margin Long Term Despite Multiple Unprofitable Programs In Portfolio: Analyst Forecasts
Portfolio Pulse from Nabaparna Bhattacharya
Needham analyst Ryan MacDonald reiterated a Buy rating on 2U, Inc. (NASDAQ:TWOU), but lowered the price target to $9 from $15. This follows 2U's worse-than-expected Q2 results, with an 8% decrease in revenue to $222.1 million. Despite this, MacDonald believes that the company's scaled unit economics can support a 20% EBITDA margin in the long term. TWOU shares are currently trading lower by 27.6% to $3.09.
August 09, 2023 | 7:43 pm
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NEGATIVE IMPACT
2U, Inc.'s Q2 results were worse than expected, leading to a lowered price target by Needham analyst. However, the company's long-term prospects remain positive with a potential 20% EBITDA margin.
The lowered price target and worse-than-expected Q2 results are likely to negatively impact TWOU's stock price in the short term. However, the analyst's belief in the company's ability to achieve a 20% EBITDA margin in the long term could provide some positive sentiment among investors.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100