There are in line statements and then there are in line statements. In Pearson's case it is only confident it can make its numbers because of 'tight cost management'.
Revenue is down 7% for the first nine months of the year, and shows no improvement from interim results. Pearson’s core activity is the provision of US higher education materials and testing. It faces a number of unhelpful structural issues including lower book rentals and stagnating enrolments in US higher education facilities.
Liberum analyst Ian Whittaker reiterates his 'sell' recommendation on the stock and 470p price target. He comments: 'We reiterate as our key Sell: while earnings guidance has been reiterated, the continued weakness in top-line trends increasingly make Pearson look like a newspaper-style story, prone to a de-rating.'
Morgan Stanley recently published a bullish note arguing the stock was pricing in a profit warning and 'could recover sharply' on the publication of this third quarter update. However if the current revenue trend continues a warning could not be ruled out.