MH Stock Forecast & Price Target

McGraw Hill is well positioned by a multi-year science-of-reading adoption cycle, with 44 states covering about 95% of the U.S. population and roughly 2K districts potentially refreshing literacy programs each year, which could expand the ELA market by up to 10% over time. Its core K-12 franchise, about 40% of K-12 revenue, is seeing capture rates at the high end of historical ranges, while Higher Education continues to gain share for 40 consecutive quarters, with revenue up 9.6% year over year to $199.8MM and recurring revenue up 2.7%. The company is also strengthening its digital-first, recurring model through AI-enabled products and tuck-in acquisitions, while maintaining attractive profitability with 37.7% adjusted EBITDA margin, $207.0MM of adjusted EBITDA, and a path toward 2.0x-2.5x leverage.

McGraw Hill is facing a deteriorating fundamental backdrop as enrollment trends are worse than anticipated, with Higher Education especially vulnerable because demand is more discretionary than in elementary and secondary education. Competitive pressure is intensifying from Pearson, Cengage, Elsevier, low-cost or free alternatives, and genAI-enabled entrants that can lower barriers to entry and weaken pricing power, while also increasing the risk of intellectual property erosion through piracy and unauthorized distribution. The company’s significant debt load adds another layer of risk, since only stable and growing cash flows can support servicing obligations and seasonal working-capital needs, and the shares already appear to trade near the bear case at 7.3x FY26 EBITDA with further downside if execution disappoints.