MARKET REPORT: Pearson shares rise to three-year high as digital overhaul pays off

Shares of Art Pearson rose to a near three-year high after earning English language learners and students returning for exams.

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

The trading update fueled growth for Pearson, previously a darling of the UK stock market when it owned the FT and The Economist, as sales of its English courses soared 36 per cent in the three months to September.

The group attributed this to increased global mobility as borders reopened post-Covid, as well as a rise in English language tests in India and Australia.

Total sales for the quarter were 7p higher than a year earlier. Meanwhile, sales of Pearson’s assessments and qualifications rose 12 percent as exams returned in the UK and US after disruptions caused by the pandemic.

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

“We believe that Pearson is well positioned for the future and we are confident that we will be able to navigate the challenging macroeconomic environment,” said boss Andy Bird.

“We are making significant progress in building a digital learning ecosystem that can serve many more people throughout their lives.”

AJ Bell financial analyst Dani Hewson said Pearson was in a “good position” after a decade-long transition from academic textbooks to offering more digital products.

Rio Tinto lost 1.1p, or 55p, to 4,750p.

The FTSE 100 rose 0.6 percent, or 44.26 points, to 7,013.99 and FTSE 250 added 0.8%, or 131 points, to 17,337.55. UK-focused stocks got 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 trading higher. 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 biggest contract to date.

As a result, Cerillion predicted that its full-year revenue and profit would “beat market expectations” and new business would remain “vibrant”. Shares jumped 8.2 percent, or 85 pence, to 1,125 pence.

“Investors are clearly hoping that Sunac will stabilize the economy and the political situation – although it is difficult to say at this point which is the more difficult task,” said Hewson of AJ Bell.

Sunak’s triumph boosted the pound, which had held steady at around $1.13, recouping most of the losses suffered since then-chancellor Kwasi Kwarteng’s ill-fated mini-budget sent markets into a tailspin last month.

But disappointing economic data from China weighed heavily on some Asian blue-chip stocks after the country’s third-quarter GDP growth missed expectations.

Fears of a slowdown hit mining stocks, which depend heavily on demand from China’s commodity-hungry economy. Antofagasta fell 2.2 percent, or 25.5 pence, to 1,122.5 pence. Anglo-American decreased by 1.7 percent, or 47.5 points, to 2,686.5 points; Fresnillo was down 2.7 per cent, or 19.6p, at 698.4p; Rio Tinto lost 1.1p, or 55p, to 4,750p, while Glencore was down 0.04 percent, or 0.2p, at 501.9p.

The data also weighed on oil prices, with international benchmark Brent falling to around $92 a barrel. But the fall failed to stop energy shares, with Shell up 0.04 percent, or 1p, to 2,345p and focused on the North Sea Harbor Energy rose 0.2 percent, or 0.8p, to 375p BP rose 1.2 percent, or 5.55p, to 470p after analysts at HSBC raised their rating on the stock to “buy ” with “hold”.

The London Stock Exchange Group (LSEG) rose 0.2 percent, or 16p, to 7,366p after JPMorgan raised its price target on the FTSE Russell operator to 9,940p from 9,700p.

Fund manager Jupiter fell 5.8 percent, or 5.8p, to 94.1p, even as it launched a £10m share buyback program to be completed by the end of the year.