Pearson (PSON.L): Underlying downgrade post mixed Q3; Full valuation but potentially one to hold against macro risks

We update our forecasts post the Q3 results and also to reflect the acquisition of ITS (ELS) and Workera (A&Q). After the mixed Q3, we cut our organic growth for English language learning (-1% to -3%) and USHE (3% to 1%), but raise the growth for A&Q from 3.4% to 4.4%. Our overall organic growth falls from 4.6% to 4.5%, with Pearson again not quite delivering on the promise of 5% growth. Next year, we cut English language learning from 5% to 3%, but raise Virtual Learning from 7% to 9%, and our overall 2027 organic growth remains 4.9%. The combined acquisition spend on ITS and Workera was c£200m, expected to add c£30m to revenues next year and to be a slight drag on profits after investment and integration costs. Our operating profit increases from £658m to £664m but falls by 1% by 2030;