Pearson (PSON) share price rises as it posts a “good start” to the year
London-listed publisher Pearson posted a one per cent rise in first-quarter revenues today, in a “good start” to 2018.
Total underlying revenues rose one per cent, as sales in North America rose three per cent and turnover in core markets, which include the UK, Australia and Italy, grew six per cent, offsetting a 12 per cent drop in the firm’s growth segment, which includes Brazil, China, India and South Africa.
The company’s share price rose nearly three per cent to 854.8p at the market open.
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Pearson said US higher education courseware revenues grew “slightly” in the quarter, but the underlying market pressures in that business “continue to impact gross sales as expected”.
Trading at Penguin Random House was in line with expectations.
The group maintained its guidance range for 2018 – it expects operating profit of between £520m and £560m and adjusted earnings per share of 49p to 53p.
John Fallon, the chief executive, said:
We have made a good start to 2018, performing in line with our expectations. We continue to make good progress against our strategic priorities including our digital transformation and we expect to grow underlying profit in 2018.
Roddy Davidson, an analyst at Shore Capital, was wary of Pearson’s recovery story, however.
Davidson said: “We are cautiously reassured by the progress highlighted above and remain positive on the potential for Pearson to tap into long-term growth in global learning spend.
“That said, we remain wary on trading conditions in the North American higher education space (which has experienced several ‘false dawns’ and is in our view highly suited to disruptive offerings) and on execution risk as the company continues to negotiate the substantial organisational and cultural change required to realign itself to a digital future.”
On this basis, Davidson said it is “too early” for investors to buy into Pearson’s recovery story with confidence.
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