KinderCare downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley downgraded KinderCare Learning (KLC) to Underweight from Equal Weight with a price target of $2.50, down from $6. The childcare industry is not positioned well for a recovery towards “typical growth” over the next 12 months due to a “plethora of headwinds,” the analyst tells investors in a research note. The firm says enrollment weakness, the likelihood for lower center growth, continuation of childcare affordability issues, decelerating pricing, and the potential for headcount reductions or budgets are impacting the market. As such, it does not expect KinderCare to return to its normalized growth algorithm in the near-term. Morgan Stanley does not see positive catalysts ahead for the shares.