Compass Point Continues to See 2U as Unique Growth Story

In a report published Monday, Compass Point analyst Michael Tarkan reiterated a Buy rating and $23.00 price target on 2U TWOU. In the report, Compass Point noted, “We are reiterating our Buy rating and $23 price target on TWOU following our recent meetings with management. We are also maintaining our 2014, 2015, and 2016 EPS estimates of ($0.57), ($0.47), and ($0.15), respectively. We continue to view TWOU as a unique growth story that is well-positioned to capitalize on the secular shift towards online education, through an emphasis on student engagement, learning outcomes, and brand preservation of high quality schools. The company's revenue visibility is significant and while profitability remains somewhat distant given new program investments, management continues to build an annuity stream of future earnings through new program launches at high-demand institutions. In this report we detail takeaways from our management meetings, provide updated thoughts around potential school targets, assess the reasonability of a $1B annual revenue run-rate, and provide an analysis of specific school-level performance.” 2U closed on Friday at $18.08.