McGraw Hill, Inc. (MH) has received a new Hold rating, initiated by UBS analyst, Joshua Chan.
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Joshua Chan has given his Hold rating due to a combination of factors impacting McGraw Hill, Inc. The company faces a challenging market environment with demographic and policy headwinds, which could hinder its ability to achieve the desired 5%+ revenue growth. Despite some positive signs of market share gains in recent years, the inherent volatility in the K-12 adoption cycles and the company’s recent transition to a public entity contribute to a balanced risk/reward outlook in the near term.
Additionally, the rise of Open Education Resources (OER) and advancements in AI technology present both opportunities and threats to traditional publishers like McGraw Hill. While these innovations could enhance productivity, they also pose competitive challenges. The company’s current valuation, based on a 7X NTM EV/EBITDA multiple, supports the Hold rating, reflecting a cautious stance amid these uncertainties.