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(Sharecast News) - JPMorgan downgraded Pearson on Tuesday to 'neutral' from 'overweight' and cut its price target on the stock to 1,420p from 1,430p, saying its forecasts now only imply modest upside and that it sees better value elsewhere.
The bank noted it has been 'overweight' on the stock for the past six years and it was one of its key picks for 2026.
"However, our forecasts and price target, which are consistent with the company's guidance for mid-single-digit growth and margin expansion, now only imply modest upside, and we see better value elsewhere - notably Relx, Wolters Kluwer, UMG and Publicis," it said.
JPM said the share price performance this year has reflected strong FY25 results, increased confidence in the company's delivery and a more positive AI narrative.
"Confidence in the outlook has been supported by contract wins while a buyback, enabled by its strong balance sheet and good cash conversion, has provided technical support," it said. "A wide AI discount at the end of last year has partially closed as the company explained that 90% of revenues come from operationally complex physical and digital workflows, and print, which will be difficult for AI to disrupt.
JPM said that while Pearson should be resilient, there were also opportunities for AI efficiencies, for AI to help personalise learning experiences, and that more broadly, AI will increase the need for learning, re-skilling, assessment and certification.
However, JPM also said its core thesis remains intact and that it was not changing its underlying forecasts.
"We continue to expect an H2 acceleration in growth from circa 4% in H1 to c6% given the phasing of contract wins / losses that will allow Pearson to deliver on its mid-term guidance of mid-single digit growth and margin expansion in 2026," it said.
Analysts at Berenberg maintained their 'buy' rating on Genus on Tuesday as it said the animal genetics firm's latest trading update showed strong momentum across the business, prompting another upgrade to full‑year guidance and extending what the broker described as a sustained run of improvements since early 2025.
Genus now expects around £98m of adjusted pre‑tax profit for FY26, including a £5.6m milestone payment from its Chinese joint‑venture partner BCA, compared with current consensus of roughly £95m. Berenberg said the uplift reflected continued strength in the core PIC porcine division and the ongoing turnaround in ABS bovine, alongside very strong free‑cash‑flow generation. Following receipt of £111m from the formation of its Chinese porcine JV, year‑end net leverage was set to fall to 0.4x, down from 1.5x a year earlier.
Berenberg, which also kept its 3,350p target price on the stock, noted that trading in H226 was ahead of expectations, with PIC delivering robust growth in Asia and Latin America, more than offsetting a difficult disease season in North America. ABS posted double‑digit profit growth as its turnaround continued, despite softer demand and a weaker product mix linked to lower global dairy prices.
The German bank highlighted "standout" cash conversion in the second half, delivering significant year‑on‑year growth in free cash flow and extending the improved trajectory under Genus' new chief financial officer. Free cash flow to equity rose to more than £40m in FY25, compared with a cumulative outflow of around £10m between FY22 and FY24.
Berenberg also said the latest upgrade demonstrated the increasing resilience of the business, driven by market‑leading genetics, a continued shift towards royalty‑based revenues and broader geographic diversification, including strong growth in Asia and a significant long‑term opportunity in China.
