K12 May Gain 150% Over the Year. But is it a Strong-Buy?

The stock market offers numerous shares to choose from, and it’s not always easy to make a decision. A lot depends on your sound judgment. If you choose the wrong stock for investing, you will lose your hard-earned money. Experienced investors better calculate the odds in their favour. But even if you are new to the market, you can still invest wisely. You just need to observe analysts’ reports, but be careful to choose good, trustworthy analysts. In that case, you can be assured that you will make a profitable investment.

K12 is one of those stocks, which has great potential for success. This company belongs to the education management organization niche. It provides a school curriculum and educational resources specifically designed for online learning as a well-functioning alternative to traditional brick-and-mortar school systems. The company was founded in 2000. However, it has come into its own during the Covid-19 crisis of 2020. During the pandemic, social lockdown policies forced students into homeschooling and online venues.

Did the stock gain during the pandemic?

While most of the stocks bottomed out due to the Coronavirus, some of them flourished. K12 is a prominent example as one of them. The stock rallied, reporting Q3 revenue of $371 million, which was higher by 37% from the prior quarter, as well as a 44.3% gain year-over-year. The firm’s general education business accounted for $313.8 million of that total, skyrocketing by 34.4% year-over-year. Furthermore, EPS soared by 150% sequentially, from 12 cents in the second quarter to 30 cents in the third quarter.

Barrington’s analyst Alexander Paris noted that K12’s management is cautiously optimistic about the company’s growth as it focuses on student retention, as well as its career learning initiatives.

Paris rated the stock as a Buy. He set a price target of $60. In case of success, investors could gain a 150% upside for the coming year. Wall Street analysts also gave the stock a Strong Buy rating.