KinderCare Learning's Enrollment Growth Slump, Lower Pricing Expectations Make a Quick Turnaround Improbable, Morgan Stanley Says

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KinderCare Learning's (KLC) enrollment growth slump, worse occupancy, and lower pricing expectations make a quick turnaround improbable, Morgan Stanley said in a Thursday research report.

Morgan Stanley lowered its fiscal 2025 and 2026 adjusted earnings before interest, taxes, depreciation, and amortization guidance by 5% and 11%, respectively, citing a slower revenue growth trend and a high fixed-cost base, according to the note.

Enrollment trends have worsened, and the macroeconomic landscape, like low consumer confidence, has affected decision-making for families. The company also witnessed challenges within its subsidy business, due to the near-term softening of tuition reimbursement rates, according to Morgan Stanley.

Hesitation in child care decision-making within families is expected into 2026, impacting enrollment growth, further, according to the firm.

Morgan Stanley downgraded the stock to equal-weight from overweight and lowered its price target to $6 per share from $11.

KinderCare Learning shares were down by more than 18% in recent trading.

Price: 4.05, Change: -0.96, Percent Change: -19.10

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