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Deutsche Bank believes that McGraw Hill is poised to be a strong artificial intelligence beneficiary. The bank initiated the education stock at a buy rating and a price target of $18. This forecast implies an upside of roughly 35% ahead for shares of McGraw Hill. Shares of McGraw Hill went public on the New York Stock Exchange in late July, with Deutsche Bank one of the initial public offering’s underwriters. The stock has slipped 21% since debuting at its IPO price of $17 per share. Shares rose 1.3% in the premarket Monday. MH 1M mountain MH 1M chart In the note, Deutsche Bank called McGraw Hill a “hidden gem” an artificial intelligence beneficiary. The company is in a good place to leverage generative AI to sell new products that could individualize a student’s learning journey, the bank said. “The company is well-positioned to take advantage of AI as its content, data-driven insights, and learning science help deliver personalized learning experiences and drive positive outcomes,” wrote analyst Faiza Alwy. “As the proliferation of AI-generated generic content raises risks of low quality information, we see McGraw Hill as a trusted provider of solutions.” Looking forward, the analyst predicts revenue growth for the company as it settles more long-term education contracts. Although the company’s fiscal year 2026 revenues are predicted to decline, revenue growth should thereafter improve through at least fiscal year 2029. “Historically, MH has successfully captured 25-30% of the market in large states. Further, contracts are generally 5–8 years long with upfront payments creating a predictable revenue backlog,” Alwy said. “In Higher Education, the company has annual subscription revenue model with up-front payments that also supports strong revenue backlog.” Alwy also noted that the company’s product has elastic demand. “End markets are recession-resilient; both K-12 and Higher Ed expenditures have remained stable over the past 30+ years, including during recessionary environments,” she wrote.
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