Moody’s changes Pearson view to negative

Moody's Investors Service said it changed the outlook on Pearson plc's ratings to negative from stable following the company's recent announcement of substantially weaker performance expectations in 2017 and uncertainty for 2018 on the back of an unexpected and material decline in its U.S. higher education profits in the fourth quarter of 2016.

Concurrently, the agency affirmed Pearson's Baa2 senior unsecured rating as well as the Prime-2 guaranteed short-term rating of Pearson Holdings Inc.

"Changing our outlook on Pearson to negative reflects the company's weaker than expected Q4 2016 performance, mainly in its U.S. higher education business, resulting in a change in its profit guidance for the next two years. There is also little visibility on a pronounced recovery as Pearson's fundamental business model is likely to continue to be challenged by lower student enrolments and disruptive structural changes," Christian Azzi, Moody's assistant vice president, analyst and lead analyst for Pearson, said in a news release.

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