Toni Kaplan, an analyst from Morgan Stanley, maintained the Buy rating on KinderCare Learning Companies Inc. The associated price target was lowered to $14.00.
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Toni Kaplan has given his Buy rating due to a combination of factors that, despite some recent challenges, suggest potential for future growth. The company faced weaker revenue due to lower enrollment, which led to a miss in revenue, EBITDA, and EPS expectations for the quarter. Management attributed these issues to specific micro-market factors, such as center director efficiency and teacher turnover, as well as adjustments to new digital enrollment methods.
Despite these setbacks, Kaplan sees potential for improvement. Pricing is expected to increase, and the company is on track with its initial guidance for non-core operations and closed centers. Additionally, while there are concerns about government funding cuts for childcare, no significant reductions have been observed. This, combined with the expectation of a stronger fourth quarter due to a 53rd week, supports the Buy rating, albeit with a slightly lowered price target.