Morgan Stanley analyst Josh Baer maintained a Sell rating on Chegg (CHGG – Research Report) today and set a price target of $1.00.
Josh Baer has given his Sell rating due to a combination of factors impacting Chegg’s financial outlook. The company is experiencing declining growth, with Q4 subscriber numbers falling short of expectations and Q1 guidance significantly below consensus estimates. This downward trend is compounded by a lawsuit against Google and Alphabet, which adds uncertainty to Chegg’s strategic direction.
Additionally, Chegg’s revenue growth is expected to further decline, with a year-over-year decrease projected at -34% for Q1, compared to -13.5% in Q3. The impact of AI-powered search engines has also led to a substantial drop in non-subscriber traffic, exacerbating the company’s challenges. These factors, along with a strategic review process, have led to a reduction in price targets and a continuation of the Underweight rating, reflecting a cautious stance on Chegg’s future performance.
Baer covers the Technology sector, focusing on stocks such as Box, Chegg, and DigitalOcean Holdings. According to TipRanks, Baer has an average return of 2.8% and a 48.60% success rate on recommended stocks.