Pearson Share Valuation Seen as Fair in New Morgan Stanley Coverage

Pearson shares (LON:PSON) are down 2.37% today, despite Morgan Stanley initiating coverage with an ‘Equal Weight' rating, suggesting the current valuation adequately reflects the company's growth prospects in the global education market. The new price target is set at 1,170p, reflecting an upside of ~7% from the current price.

The stock is currently trading around 1,091p, positioned near the lower end of its 52-week range of 1,018p to 1,401p. This valuation comes as Pearson demonstrates underlying sales growth, reporting a 4% increase in the third quarter of 2025, spurred by a notable 13% surge in virtual learning enrollments for the upcoming academic year. The company's success in adapting to the increasing demand for online education is evident.

Pearson has been actively pursuing strategic partnerships to bolster its market position. A collaboration with Cognizant, aimed at enhancing workforce readiness for the AI era, was announced in early September 2025. This announcement was followed by a 3.02% dip in premarket trading, reflecting broader market sentiments and potential profit-taking within the technology sector.

The company has also secured an exclusive agreement to provide Salesforce certification exams. Additionally, Pearson has introduced AI literacy modules, an initiative designed to equip instructors with the tools to teach responsible AI skills, addressing concerns about misuse and providing students with credentials valued in the modern workforce.

The initiation of coverage by Morgan Stanley, coupled with recent financial performance and strategic initiatives, paints a mixed picture. While the stock's valuation is deemed fair for a mid-single-digit grower, the mixed analyst ratings and market reactions suggest that careful consideration is required as Pearson faces up to the changing demands of the global education sector.