BMO Capital Downgrades KinderCare Learning to Outperform with PT of $12.

BMO Capital Downgrades KinderCare Learning to Outperform with PT of $12.

BMO Capital Markets has downgraded KinderCare Learning (KLC) to "Outperform" with a price target of $12, following the company's Q2 2025 earnings report. The downgrade comes despite the company reporting a 3.1% increase in earnings per share (EPS) and a 35.2% surge in net income, while revenue grew by 1.5% to $700.11 million [1].

KinderCare Learning's CEO, Paul Thompson, highlighted the challenges in adjusted EBITDA but emphasized progress in subsidy programs and B2B expansion. The company raised its full-year revenue guidance to $2.75–$2.8 billion, citing tuition growth and expanded B2B partnerships. The stock price rose 2.4% month-to-date but a post-earnings investment strategy underperformed significantly, delivering a negative compound annual growth rate (CAGR) of -73.33% [1].

BMO analysts cited concerns over the company's adjusted EBITDA margins and the potential for higher operating expenses. They noted that while KinderCare's B2B segment showed promise, the overall outlook for the company's core early childhood education business remains uncertain. The analysts also pointed to the potential impact of regulatory changes on the company's subsidy programs [2].

KinderCare Learning's Q2 results were mixed, with revenue and EPS growth below analysts' expectations. The company's stock price has been volatile, reflecting investor uncertainty about the company's future prospects. Despite the downgrade, BMO analysts believe that KinderCare Learning's stock could still perform in line with the broader market in the near term [2].

References:
[1] https://www.ainvest.com/news/kindercare-learning-2025-q2-earnings-strong-performance-net-income-surges-35-2-2508/
[2] https://www.fxstreet.com/news/kindercare-learning-companies-inc-klc-q2-earnings-taking-a-look-at-key-metrics-versus-estimates-202508130616