Don’t sleep on Laureate Education , Morgan Stanley said. The Wall Street bank upgraded the Baltimore-based smallcap, which operates universities in Mexico and Peru, to overweight from equal weight. Morgan Stanley also raised its price target to $17 from $15, implying more than 20% upside over the next 12 months. One key catalyst cited by analyst Javier Martinez de Olcoz was “nearshoring.” That is, companies moving their supply chain closer to home. Mexico has been tipped as a beneficiary of this trend as U.S. companies try to source goods away from Asia and avoid the worst of the supply chain issues that plagued them at the height of the pandemic. “Education is a key part of the nearshoring story,” Martinez said. “Mexico will require not only a larger workforce, but also significant upskilling/reskilling.” “Mexico’s post-secondary education has lower participation rates vs. Latam peers, and access to skilled labor is one of the country’s main weaknesses, according to U.S corporates,” he added. “The investments in new plants and the government’s need to expand the infrastructure should require a large number of specialized workers, with the post-sec leader Laureate being one of the best positioned players to capture the opportunity, in our view.” Shares of Laureate are up almost 46% year to date. The company also gained more than 5% last week after posting second-quarter revenue that exceeded analyst expectations and raising its full-year sales and EBITDA guidance. LAUR YTD mountain LAUR in 2023 Laureate also said it expects enrollment in its universities to grow this year by 6%-7% over 2022 levels. On top of all that, Morgan Stanley’s Martinez noted Laureate’s valuation is cheap relative to Brazilian rivals such as Vitru and Ser Educacional . Vitru and Ser are up 24% and 88%, respectively over the past three months. Laureate has climbed 16% in that same time. “After the strong performance in the recent months, the multiple gap has opened and we see an attractive story building up for Laureate, favored by the nearshoring cycle,” Martinez said. — CNBC’s Michael Bloom contributed reporting.
