Citi Reiterates Neutral Rating on Chegg (CHGG)

Citi analyst Thomas A Singlehurst reiterated a Neutral rating on Chegg (NYSE: CHGG).

The analyst comments "Although Chegg has some material advantages that should stand it in good stead over time – namely a solidly profitable and cash-generative financial model with a solid balance sheet (Chegg currently has net cash) – sustained pressure on revenue represents a fairly significant overhang for the equity, at least in the short-term. The key uncertainty here is that, having tagged the impact of generative AI on demand as early as 1Q 2023 and with the group continuing to see pressure on web traffic, there is limited comfort that current pressure will prove temporary. While we think the group’s decisive action on the cost base will clearly support earnings in the short-term and, in relative valuation terms, the group screens as being very cheap (at <1x EV/Sales), we do not expect a stabilization in revenue growth until 2025E/2026E and, as such, stay Neutral."

For an analyst ratings summary and ratings history on Chegg click here. For more ratings news on Chegg click here.

Shares of Chegg closed at $1.90 yesterday.

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