Kepler downgraded Pearson from Reduce to Hold, cutting its price target to 1,000 pence from 1,045 pence. The move came after Pearson’s share price fell below the target following a trading statement. Kepler called the sell-off “somewhat of an overreaction,” but cited new first-half 2026 headwinds in its Assessment business.

The downgrade reflects a lost contract with New Jersey worth £20 million, which will drag on group EBITA by about 55 basis points for fiscal 2026. Kepler raised its like-for-like revenue forecast for the year to 3.5%, but this remains below the 4.7% consensus. The firm also trimmed its operating margin outlook slightly.

Despite the upgrade to Hold, Kepler prefers other professional publishing stocks like RELX and Wolters Kluwer, noting the latter is cheaper despite faster growth. Pearson’s £350 million share buyback for 2026 offers some support, but investors will watch how the Assessment unit navigates the contract loss and broader market pressures.