Shareholders may want to hold off trading Pearson stock just yet
Published: 09:27 20 Sep 2023 EDT
Shareholders in Pearson PLC (LSE:PSON) may want to hold their shares for the medium term rather than buy more stock following the educational publisher's loss of its former chief executive Andy Bird.
Analysts at financial services firm Shore Capital Group (LSE:SGR) have downgraded their rating of the publisher’s stock from ‘buy’ to ‘hold’ following the appointment of new CEO Omar Abbosh.
This is despite Abbosh’s “bullish” skillset. He was previously president of Microsoft Corporation (NASDAQ:MSFT)’s industry solutions business and held several senior leadership roles at Accenture (NYSE:ACN).
They instead anticipated “short-term share price volatility” at Pearson due to the lack of detailed information around the departure of Bird, a seasoned media executive, and his successor’s new business plan.
Nevertheless, Shore Cap predicts that the company is “well placed to capitalise on medium-term growth in a global learning spend” and its analysts were positive about the publisher’s plans to use artificial intelligence to enhance content.
Analysts cited the remuneration package likely to be paid to the former CEO, in spite of his relatively short tenure of under three years, which has not yet been announced.
They said the publisher “is not renowned for underpaying its senior team”, adding “and it certainly can’t be accused of not paying up to get its man this time round”.
Abbosh’s annual base salary of £1 million, which will be paid in addition to an annual cash allowance to replace a 16% pension payment, compares with last year’s total recorded CEO remuneration of US$8.4 million.
