2U Inc Received its Third Buy in a Row

By Ryan Adsit

After BMO Capital and Pacific Crest assigned a Buy rating to 2U Inc in the last month, the company received another Buy, this time from Oppenheimer. Analyst Brian Schwartz reiterated a Buy rating on 2U Inc (NASDAQ: TWOU) today and set a price target of $38. The company’s shares closed yesterday at $34.73.

Schwartz said:

“Yesterday, 2U’s management provided an upbeat set of business and university partner presentations, and we think the overall tone was confident during its inaugural investors day. Positive takeaways included: 1) Management increased the TAM opportunity slightly by raising the number of target verticals to 60-90, up from 60 last year and 30 in 2014; 2) 2017-2019 financial guidance was provided that targets 30%+ organic revenue growth with low single-digit profitable EBITDA margin improvement per annum; 3) pipeline expansion momentum appears robust; 4) there are many options to drive future operating leverage; and 5) while management remains laser- focused on the US graduate degree opportunity, we see several attractive new growth catalysts for the business longer term.”

According to TipRanks.com, Schwartz is a top 25 analyst with an average return of 18.5% and a 66.6% success rate. Schwartz covers the Technology sector, focusing on stocks such as Palo Alto Networks, Callidus Software, and Ultimate Software.

Currently, the analyst consensus on 2U Inc is Strong Buy and the average price target is $41, representing a 18.1% upside.

In a report issued on November 3, Pacific Crest also reiterated a Buy rating on the stock.

Based on 2U Inc’s latest earnings report for the quarter ending September 30, the company posted quarterly revenue of $51.96 million and GAAP net loss of $6.76 million. In comparison, last year the company earned revenue of $37.09 million and had a GAAP net loss of $8.24 million.

Based on the recent corporate insider activity of 43 insiders, corporate insider sentiment is neutral on the stock. Earlier this month, Edward Macias, a Director at TWOU bought 1,064 shares for a total of $22,791.

2U, Inc. provides cloud-based software-as-a-service solutions for nonprofit colleges and universities to deliver education to qualified students. The company’s cloud-based SaaS platform solutions include online campus, an online learning platform that enables its clients to offer educational content together with instructor-led classes in a live, intimate, and engaging setting through proprietary Web-based and mobile applications; and content management system, which enables its clients to author, review, and deploy asynchronous content into their online programs. Its cloud-based SaaS platform solutions also comprise application processing portal that automates the online application process for prospective students of its client’s programs; and customer relationship management deployments, which serve as the data hub for scheduling, student acquisition, student application, faculty admissions review, enrollment and student support for each program. The company offers a suite of technology-enabled services, including content development, student acquisition, and state authorization services, as well as application advising, student and faculty support and in-program student field placements that support the lifecycle of a higher education program or course. 2U was founded by Christopher J. Paucek in April 2008 and is headquartered in Landover, MD.