KinderCare Learning off to a poor start as a public company - Barclays

[Children drawing and making crafts in kindergarten or daycare.]
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KinderCare Learning Companies (NYSE:KLC [https://seekingalpha.com/symbol/KLC]) is off to a poor start as a publicly traded company, and its 45% year-to-date performance and weak enrollment aren’t inspiring confidence among investors, says Barclays’ Manav Patnaik, who pulled his bullish rating on the stock in the wake of disappointing second quarter results. [https://seekingalpha.com/news/4484171-kindercare-learning-center-misses-q2-expectations-narrows-guidance-on-lower-enrollment-expectations]

“The path to rebuild confidence is likely a very long one,” says Patnaik, and the 37% (of revenue) government exposure will always be a debated point in a noisy macro and DOGE environment," he adds, downgrading KLC to Equal Weight from Overweight, and giving a 55% haircut to his price target, now at $9.

While there was hope that the company could continue to build on first quarter results, KinderCare Learning (NYSE:KLC [https://seekingalpha.com/symbol/KLC]) missed second quarter revenue, EBITDA, and EPS expectations, and guided down FY25 outlook, saying the results were as expected and tracking well, leading the company to say it was very confident in key components.

“The second quarter did have some enrollment challenges but those don't define the strength or trajectory of our business. We delivered meaningful wins, took decisive action where needed and are heading into the back half of the year with greater clarity,” KinderCare CEO Paul Thompson said on the company’s earnings call.

“Perhaps communicating and managing expectations needs to improve,” said Patnaik. “Yes, margins and EPS beat, but the focus is on visibility and revenue execution given a slow start as a public company.”

The results amplified by Barclays' downgrade drove KinderCare Learning (NYSE:KLC [https://seekingalpha.com/symbol/KLC]) shares down nearly 20% on Wednesday to their lowest level since going public in October 2024.

MORE ON KINDERCARE LRN

* KinderCare Learning Companies, Inc. (KLC) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4812925-kindercare-learning-companies-inc-klc-q2-2025-earnings-call-transcript]
* KinderCare Learning Companies, Inc. 2025 Q2 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4812863-kindercare-learning-companies-inc-2025-q2-results-earnings-call-presentation]
* KinderCare Learning Companies: An Attractive Education Play [https://seekingalpha.com/article/4808590-kindercare-learning-companies-attractive-education-play]
* Kindercare narrows 2025 outlook to $2.75B–$2.8B revenue as occupancy guidance lowered and B2B growth continues [https://seekingalpha.com/news/4484389-kindercare-narrows-2025-outlook-to-2_75b-2_8b-revenue-as-occupancy-guidance-lowered-and-b2b]
* KinderCare Learning Center misses Q2 expectations, narrows guidance on lower enrollment expectations [https://seekingalpha.com/news/4484171-kindercare-learning-center-misses-q2-expectations-narrows-guidance-on-lower-enrollment-expectations]