Pearson: Steady Execution and Balanced Risk/Reward Justify Maintaining Hold Rating

Pearson, the Communication Services sector company, was revisited by a Wall Street analyst yesterday. Analyst Laura Metayer from Morgan Stanley maintained a Hold rating on the stock and has a p1,170.00 price target.

Laura Metayer has given his Hold rating due to a combination of factors relating to Pearson’s solid but not spectacular performance and outlook. She notes that full-year 2025 revenue and adjusted EBIT were broadly in line with both consensus expectations and Morgan Stanley estimates, indicating that the company is executing as guided but not materially outperforming. The strong fourth-quarter acceleration, with all divisions contributing and particularly robust growth in Virtual Learning, reinforces confidence that Pearson can deliver on its previously signaled second-half weighting. At the same time, some areas such as English Language Learning grew slightly below the company’s own high single-digit target, and Higher Education continues to face structural headwinds despite a stabilisation in recent trends.
Metayer also highlights that management has reiterated its medium-term ambitions for mid-single-digit underlying revenue growth, gradual margin improvement, and strong cash conversion, and current market forecasts for 2026 are consistent with this trajectory. Given that recent results largely match expectations and that the share price already reflects the improved execution and credible mid-term guidance, she anticipates the stock will move broadly in line with the wider market rather than deliver outsized returns. In this context, the risk/reward profile appears balanced: operational progress and cash generation are supportive, but upside catalysts beyond the current plan are limited. This mix of steady fundamentals without a clear driver for material outperformance underpins her decision to maintain a Hold recommendation on Pearson shares.

In another report released yesterday, Bank of America Securities also maintained a Hold rating on the stock with a p1,170.00 price target.

Based on the recent corporate insider activity of 30 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of PSON in relation to earlier this year.