Needham Remains Bullish On Chegg With Healthy International Growth, Post-COVID Retention

Chegg Inc CHGG was one of the three most-used study tools according to a proprietary survey of university students across the U.S., UK, Canada and Australia, with continued learn-from-home trends, according to Needham.

The Chegg Analyst: Ryan MacDonald maintained a Buy rating for Chegg, while keeping the price target unchanged at $120.

The Chegg Thesis: The international survey data suggests that “the pandemic and targeted investments resulted in strong usage that looks poised to improve in 2021, giving us increased confidence that Chegg can exceed its target of 1mm+ subscribers,” MacDonald said in the note.

He expects paid subscriber retention in the U.S. to remain strong even as students return to offline classes and while Chegg may also achieve ARPU (average revenue per user) expansion in the near term.

While expressing skepticism around Chegg’s efforts to limit account sharing resulting in paid subscriber conversion, the analyst added that the company could “profitably add Chegg Services subscribers, both domestically and internationally, and drive ARPU expansion, at an accelerated pace.”

CHGG Price Action: Shares of Chegg had risen by 1.90% to $93.43 at the time of publication Monday.

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