Pearson, the world's largest education company, has been downgraded by UBS from 'buy' to 'neutral' after an 18% share price gain this year left the stock trading above its publishing peers on a valuation basis.
UBS kept its price target unchanged at 1,300p, implying only modest upside from the current price of 1,273p.
The Swiss bank said Pearson now traded at 16.3 times its 2027 adjusted price-to-earnings ratio, above the peer group average of 15.5 times, despite offering a broadly comparable earnings growth outlook of 12% annually through to 2029.
"While operational momentum remains solid, we see a less certain catalyst path from here," UBS said, adding that the growth outlook was now largely embedded in consensus expectations.
UBS kept its 2026 forecasts unchanged, projecting revenues of £3.7 billion and adjusted earnings per share of 69.4p, and continues to expect around 5% underlying revenue growth for the year.
The bank highlighted several strengths it believes remain intact, including Pearson's limited exposure to AI-driven disruption in digital courseware.
It also cited strong momentum in its Virtual Learning and Enterprise Solutions divisions, and a dominant position in Assessment and Qualifications, where it faces little direct competition.
Pearson is due to release a nine-month trading update on 22 October.
