Phoenix Education Partners (PXED) benefits from strong brand positioning in a large adult-learner market, alongside a debt-free balance sheet and robust free cash flow generation, Morgan Stanley said in a Wednesday note.

The brokerage highlighted 4% year-over-year enrollment growth, above its 2% forecast and the 1.5% consensus, helping to ease concerns around stricter FAFSA identity verification.

According to the report, average enrollment for the quarter rose to 85,000, while stronger-than-expected margins pushed adjusted earnings before interest, taxes, depreciation, and amortization 4% above Morgan Stanley's estimate and 6% ahead of consensus.

Despite maintaining conservative 2026 guidance calling for 2% to 3% revenue growth and 0% to 2% adjusted EBITDA growth at the midpoint, Morgan Stanley expects upward revisions and raised its 2026-2027 adjusted EBITDA forecasts by 2%, the report said.

The firm maintained its overweight rating on the stock and raised its price target to $46 from $45.

Shares of the company were down more than 6% in recent trading.

Price: 28.80, Change: -2.91, Percent Change: -9.18