KinderCare Learning Companies Inc, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Toni Kaplan from Morgan Stanley downgraded the rating on the stock to a Hold and gave it a $6.00 price target.
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Toni Kaplan has given his Hold rating due to a combination of factors affecting KinderCare Learning Companies Inc. The company has faced deteriorating enrollment trends and slower decision-making in the current macroeconomic environment, which have contributed to slower revenue growth. This situation, coupled with a high fixed cost base, is likely to lead to margin compression, making it difficult for the company to return to its normal growth algorithm until fiscal year 2027.
Additionally, the company’s lower enrollment growth, worse occupancy rates, and reduced pricing expectations have led to a downgrade in revenue and adjusted EBITDA guidance. As a result, Kaplan has lowered the price target for KLC’s stock to $6 from $11, reflecting a reduction in estimates and a lower terminal EV/EBITDA multiple. Given these challenges, Kaplan has limited confidence in a quick turnaround for the company, justifying the Hold rating.
According to TipRanks, Kaplan is a 3-star analyst with an average return of 1.9% and a 55.02% success rate. Kaplan covers the Industrials sector, focusing on stocks such as Republic Services, Thomson Reuters, and Cintas.
In another report released today, UBS also downgraded the stock to a Hold with a $4.50 price target.