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Needham Analyst Ryan McDonald reiterated a buy rating on the stock. Barnes & Noble Education Inc (NYSE: BNED ) with a $4 price target.
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BNED’s 3QFY23 revenue of $447.1 million came in above analyst estimates of $406.0 million, while adjusted EBITDA came in $13.5 million below analyst estimates of $6.4 million.
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Total revenue grew 11.0% Y/Y, while the retail segment increased 12.4% Y/Y and the wholesale segment increased 5.2% Y/Y, partially due to a (4.5%) Y/Y decline in DSS.
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The analyst was optimistic on the FY23 numbers, but more interested in the updates around the accelerated FDC conversion.
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BNED plans to convert all existing customers by Fall 23 or Fall 24, fundamentally improving the business’s margin profile.
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Once converted, this existing student base could represent $1.4 billion in annual revenue potential, growing to $5.5 billion as BNED continues to pursue the remaining 12 million undergraduates, the analyst added.
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Combined with 35% gross margins, the analyst sees the potential for significant adj. EBITDA margin expansion once the transition is complete.
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The analyst said that the DSS segment will prioritize profit growth, which could be improved by integrating with OpenAI.
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Price actionAt last check Friday, BNED shares were up 8.14% at $1.86.
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Latest rankings for BNED
|
day |
Firm |
Action |
from |
b |
|---|---|---|---|---|
|
March 2022 |
Needham |
He waits. |
Buy it |
|
|
October 2021 |
Needham |
He waits. |
Buy it |
|
|
March 2021 |
Needham |
He waits. |
Buy it |
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This article Barnes & Noble Education Seeks to Read Positive Business Model Impacts, Analyst Says appeared first on Benzinga.com.
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