JPMorgan downgrades KinderCare to Neutral on enrollment challenges

JPMorgan analyst Andrew Steinerman downgraded KinderCare Learning (KLC) to Neutral from Overweight with a price target of $10, down from $15, post the Q2 report. The stock in morning trading is down 20% to $7.85. The firm sees the company’s enrollment challenges persisting at least through 2025. The softer macro environment is likely to weigh on the early childhood education industry in 2025 and flat funding for the Child Care and Development Block Grant through 2026 makes a near-term inflection in KinderCare’s enrollment growth unlikely, the analyst tells investors in a research note.