Truist Securities on Monday reiterated a Buy recommendation for Universal Technical Institute, assigning a $40.00 price target that implies about a 39% gain from the stock's current level of $28.85. The research note, issued ahead of an earnings report due in two days, positions UTI as Truist's "favorite name in Education for 2026."
The firm acknowledged investor wariness around UTI's valuation - which sits toward the upper tier of comparable companies - while noting the company is projecting minimal EBITDA growth in the coming two years. Data cited in the note places the company at a price-to-earnings ratio of 25.3 and an enterprise-value-to-EBITDA multiple of 14.1, with valuation analysis suggesting the shares may trade above an internal Fair Value estimate.
Truist attributes the tempered near-term EBITDA outlook to UTI's elevated investment pace in growth initiatives. Those initiatives, the firm says, have contributed to robust top-line performance: revenue rose 14% over the last twelve months and the company has posted a five-year revenue compound annual growth rate of 23%.
In its note, Truist outlined a scenario in which student enrollment could rise by roughly 10% over the next two years. The firm argues that such enrollment momentum - in a sector it describes as one that "largely trades on start momentum" - should be sufficient to fuel stock appreciation despite limited immediate EBITDA expansion.
Truist's $40 valuation target is derived from a 16.3x EV/EBITDA multiple applied to calendar year 2027 estimates, per the research communication. The firm expressed conviction in UTI's demand outlook relative to other education-sector equities, even as it concedes the company's valuation metrics are near the high end of its peer group.
Recent financial results lend context to Truist's stance. For the fourth quarter of 2025, Universal Technical Institute reported adjusted earnings per share of $0.34, exceeding the $0.27 estimate referenced in the research note - a 25.93% positive surprise. Revenue for the quarter came in at $222.42 million versus the $219.21 million projection cited, also beating consensus expectations.
Those quarterly beats are presented in the note as evidence of the company's ability to deliver beyond forecasts, and Truist notes that the market reaction to the results has been favorable. The research communication emphasized that while the valuation is elevated and near-term EBITDA growth is constrained by investment spending, the combination of demonstrated revenue strength and an enrollment growth pathway underpins the firm's Buy rating.
Contextual note: The research note referenced an expectation for a near-term earnings report and provided the valuation and operational metrics summarized above to explain the Buy recommendation. The firm framed UTI's investment-led EBITDA profile as a trade-off for higher demand visibility and revenue growth.