MARKET REPORT: Pearson shares rise to a three-year high as its digital revamp pays off

Shares in Pearson rose close to a three-year high after it cashed in on people learning English and students returning to exams. 

The FTSE 100 education publisher gained 8.7 per cent, or 77.6p, to 965p as it remained on track to meet sales and profit expectations for the year. 

The trading update provided a lift for Pearson, which used to be one of the UK’s stock market darlings when it owned the FT and The Economist, as sales of its English language learning courses soared 36 per cent in the three months to September. 

Shares in Pearson rose close to a three-year high after it cashed in on people learning English and students returning to exams

The group put this down to an increase in global mobility as borders re-opened after Covid as well as a surge in English tests taken in India and Australia. 

Total sales for the quarter were 7p per cent higher than a year earlier. Pearson’s assessment and qualifications sales, meanwhile, shot up 12 per cent as exams returned in the UK and US following the disruption caused by the pandemic. 

The group’s higher education sales took a small hit while plans to offload its South African business are expected to be completed before the end of the year. Pearson also aims to cut costs by as much as £100m next year. 

‘We believe Pearson is well positioned for the future, and we are confident of being able to navigate the challenging macroeconomic environment,’ said boss Andy Bird. 

‘We are making strong progress in creating a digital learning ecosystem which can serve many more people across their lifetime of learning.’ 

AJ Bell financial analyst Danni Hewson said Pearson is in a ‘good position’ after its ten-year transition from academic textbooks to offering more digital products. 

Rio Tinto lost 1.1p per cent, or 55p, to 4750p

The FTSE 100 was up 0.6 per cent, or 44.26 points, at 7013.99 and the FTSE 250 added 0.8 per cent, or 131 points, to 17337.55. UK-focused stocks received a boost as markets reacted positively to Rishi Sunak becoming Prime Minister after Boris Johnson pulled out of the Conservative Party leadership race on Sunday. 

STOCK WATCH: Cerillion

Shares in Cerillion hit a record high after a bullish trading update. The billing and customer management software firm said it had traded ‘very well’ in the second half of the year to the end of September, securing its largest contract to date. 

As a result, Cerillion predicted its full-year revenues and profits would be ‘ahead of market expectations’ and new business remained ‘buoyant’. Shares jumped 8.2 per cent, or 85p, to 1125p. 

‘Investors clearly hope Sunak will stabilise the economy and the political situation – though it’s hard to work out at this point which is the harder task,’ said AJ Bell’s Hewson. 

Sunak’s triumph boosted the pound, which was steady at around $1.13, recovering most of the losses suffered after then chancellor Kwasi Kwarteng’s illfated mini-Budget that sent markets into a tailspin last month. 

But disappointing economic data out of China weighed heavily on several Asia-focused blue-chip stocks after the country’s GDP growth for the third quarter fell short of expectations. 

Fears of a slowdown hit mining stocks, which rely heavily on demand from China’s commodity-hungry economy. Antofagasta fell 2.2 per cent, or 25.5p, to 1122.5p. Anglo American dropped 1.7 per cent, or 47.5p, to 2686.5p; Fresnillo slipped 2.7 per cent, or 19.6p, to 698.4p; Rio Tinto lost 1.1p per cent, or 55p, to 4750p and Glencore dipped 0.04 per cent, or 0.2p, to 501.9p. 

The data also hit oil prices, with international benchmark Brent crude falling to around $92 a barrel. But the decline failed to curb energy shares, with Shell up 0.04 per cent, or 1p, to 2345p and North Sea-focused Harbour Energy gaining 0.2 per cent, or 0.8p, to 375p. BP ticked up by 1.2 per cent, or 5.55p, to 470p after analysts at HSBC upgraded their rating on the stock to ‘buy’ from ‘hold’. 

The London Stock Exchange Group (LSEG) rose 0.2 per cent, or 16p, to 7366p after JPMorgan hiked the FTSE Russell operator’s target price to 9940p from 9700p. 

Fund manager Jupiter fell 5.8 per cent, or 5.8p, to 94.1p even though it launched a £10m share buyback programme that will be completed before the end of the year.