MH Stock Forecast & Price Target

McGraw Hill is projecting an increase in recurring revenue to a range of $1,504-$1,524 million, reflecting growth compared to prior estimates and bolstered by a significant contribution of approximately $61 million from its higher education segment. The company's EBITDA is also expected to rise from $657 million to $727 million, demonstrating improved operating margins from 33% to 35%, which signals enhanced profitability. Furthermore, the reported 2.4% year-over-year growth in higher education enrollment, particularly a robust 4.0% increase in community colleges, suggests a solid foundation for continued market share expansion and overall business growth.

The financial outlook for McGraw Hill reflects a projected total revenue decline of 4.1% year-over-year at the midpoint, primarily driven by challenging conditions in the K-12 segment and worsened enrollment trends within Higher Education. EBITDA margins are expected to decrease by 70 basis points year-over-year, highlighting issues related to operating leverage exacerbated by declining K-12 purchasing cycles, which are compounded by reduced purchasing opportunities in key states. Additionally, budgetary pressures resulting from declining international student enrollment and heightened competition from alternative educational solutions such as artificial intelligence may further impede sales and revenue growth in the future.