Pearson shares tank on lack of 2026 guidance, NJ contract loss

(Sharecast News) - Shares in Pearson dropped sharply on Wednesday despite the educational publishing and services group reporting an acceleration in growth at the end of last year, as investors showed their disappointment with the absence of forward guidance and the loss of a key US contract. Ahead of its annual results announcement on 27 February, Pearson said underlying sales were up 4% over the year, with growth picking up to 8% in the fourth quarter from 4% in the third.

The company said it delivered against its 2025 strategic priorities, launching its new AI-powered learning solution integrated into Microsoft 365 called Communication Coach. Ongoing momentum was also experienced in the enterprise side of the business, including a new strategic partnership with IBM and a vocational skilling contract for the construction sector in Saudi Arabia.

Underlying adjusted operating profit rose around 6% to £610m-615m, slightly ahead of the consensus forecast of £606m at the time of the company's last update in October.

However, one notable development was the loss of a key US Student Assessment contract in New Jersey. While the wider Assessments & Qualifications division - the company's largest at just under half of group sales - experienced 8% growth in the fourth quarter, and 4% for the whole year, Pearson said that the contract loss "will be a headwind in H1 2026".

"In 2025 we successfully delivered against our financial and strategic priorities by expanding our partnerships, growing our Enterprise reach, and advancing the use of AI to improve learning and upskilling," said chief executive Omar Abbosh. "We enter 2026 with momentum, are excited about the opportunities that lie ahead, and remain well positioned to deliver value to our stakeholders."

The stock was down 7.8% at 991.72p by 1018 GMT.

According to Dan Coatsworth, head of markets at AJ Bell, the lack of a detailed outlook for 2026 and the lost New Jersey work "saw Pearson punished in early trading".

He said: "In an environment with mounting concern about AI's ability to disrupt Pearson, its latest statement didn't offer the reassurance investors were looking for. Pearson needs to do more when it posts its full-year results next month to convince investors AI can be more of an opportunity than a threat and that it can realise an improvement in underperforming parts of the business."