McGraw Hill shares rise on strong earnings outlook

Shares of McGraw Hill surged 6% in early trading on Thursday after the education publisher reported quarterly earnings that topped analyst estimates and raised its full-year outlook.

The New York-based company posted adjusted earnings per share of 98 cents for the three months ended March 31, compared with the 92-cent consensus estimate compiled by Refinitiv. Revenue rose 5% year-over-year to $520 million, also exceeding forecasts.

McGraw Hill raised its full-year adjusted EPS guidance to a range of $3.80 to $3.90 from the prior $3.65 to $3.80, citing stronger demand for digital learning tools and sustained adoption of its K-12 and higher-education platforms. The company maintained its revenue guidance at $2.05 billion to $2.10 billion.

Analysts at Jefferies and Citigroup upgraded their price targets on the stock following the results, with Jefferies raising its target to $55 from $50 and Citigroup to $52 from $48. The stock had underperformed the S&P 500 over the past year but now trades near the upper end of its 52-week range.

The company’s digital segment, which includes platforms like Connect and ALEKS, grew 8% year-over-year, outpacing the 3% growth in its traditional print business. McGraw Hill attributed the digital strength to increased institutional spending on educational technology and hybrid learning models.

Chief Executive Officer Paul Perrault said the company was benefiting from a "structural shift" in education toward digital solutions, which has accelerated post-pandemic. He added that the raised guidance reflects confidence in sustained demand across its core markets.

The shares were last up 5.8% at $49.20 in mid-morning trading, putting the stock on track for its best day since November 2023.