Pearson slumps on US peer John Wiley's results; Liberum reiterates 'sell' rating

Shares in education publisher Pearson slumped on Thursday after US peer John Wiley & Sons slid nearly 7% in the previous session following the release of disappointing first-quarter results.

Liberum said the drop in John Wiley shares was primarily driven by the company’s comments on its education business, which saw a 14% decline in overall revenue and a 31% fall in printed book revenues.

“The comments from Wiley suggest a market that is seeing increasing structural pressure; interestingly, there were also no comments from management suggesting the weakness was due to enrolment factors, which has been Pearson’s explanation for problems in its US Higher Education business, which is our biggest area of concern with the shares (estimated 45% of group profits).”

Liberum reiterated its ‘sell’ rating and 470p price target on Pearson, saying it expects another profit warning from the company.

It pointed out that Pearson is very much weighted to the second half and said the news from John Wiley strengthens its conviction that it will deliver another profit warning and that its problems are primarily structural in nature.

At 1045 BST, Pearson shares were down 3.9% to 830p.