The coronavirus pandemic forced everyone across the globe to do everything from home, giving rise to the surge of remote learning. This left educational institutes in a hurry to incorporate online courses and other technological enhancements in their systems, to catch up with the new normal and maintain education continuity. This, in turn, boosted the growth of many education technology (EdTech) companies.

PowerSchool Holdings (PWSC) is among the many EdTech firms that profited off the pandemic. The stock is steadily gaining traction and is up 39.2% since its first day of trading, two months ago. (See PowerSchool stock chart on TipRanks)

Grandview research says that the global EdTech market size is on track to grow at a CAGR of 19.9% between 2021 and 2028. Moreover, the K-12 domain of EdTech contributed to more than 41% of total revenue share in the education sector in 2020, and is expected to continue to lead the market, with steady growth. This spells good news for PowerSchool’s prospects and keeps me bullish on the company.

After the cloud-based K-12 education software provider released its second-quarter 2021 results on September 9, its first earnings release after going public, Piper Sandler analyst Arvind Ramnani reiterated a Buy rating on PowerSchool, and increased the price target to $38 from $30. Ramnani was encouraged by the management’s commentary on the developments and an upbeat outlook for the company.

Nonetheless, the company still has a long way to go. A highly leveraged balance sheet and strong competition from the likes of Instructure (INST), Coursera (COUR), and Duolingo (DUOL), all of which launched their IPOs this year, are likely to remain headwinds in the forthcoming months.

Moreover, as the remote-learning trend gathers steam, the market will attract more entrants, making competition tougher. In such an environment, the high level of debt might be a hindrance in the path of PowerSchool to pursue growth-driving initiatives.

Wall Street consensus reflects cautiously optimistic sentiments around PowerSchool, with a Moderate Buy rating, based on 7 Buys and 3 Holds. The average PowerSchool price target of $36.86 indicates an upside potential of 47.2%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Can PowerSchool Power Up Your Portfolio? appeared first on TipRanks Financial Blog.

----------------------------

By: Chandrima Sanyal
Title: Can PowerSchool Power Up Your Portfolio?
Sourced From: blog.tipranks.com/can-powerschool-power-up-your-portfolio/
Published Date: Wed, 29 Sep 2021 11:40:05 +0000

Read More