It’s time to load up on shares of Brazilian software education company Arco Platform , according to JPMorgan. Analyst Marcelo Santos upgraded Arco to overweight from neutral, citing the education stock’s resilience in a downturn, as well as its current attractive entry point. “[We] see (1) the company well positioned to ride the uncertain macroeconomic scenario, given strong inflation pass-through capabilities of the private K12 market; and (2) the weakness in shares being an attractive entry point, given significant underperformance versus the broader education sector,” Santos wrote in a Tuesday note. The analyst set a $20 price target for December 2023, implying roughly 50% upside from current levels. According to the note, the weakness in the stock — shares of Arco are down 37% year to date, and are about 48% off its 52-week high — represents a buying opportunity for investors. Meanwhile, the analyst appreciates the pricing power of the education company. “With the exception of the pandemic years of 2020 and 2021, private K12 schools have been successful in increasing tickets above inflation since at least 2006, and we expect this positive behavior to continue in coming years. Content providers like Arco should benefit, also being able to push higher prices,” the note read. —CNBC’s Michael Bloom contributed to this report.
