COVID-19 has been disastrous for many companies across a plethora of industries, yet some have reaped the benefits of the pandemic’s disruption. Take online education specialist Chegg (CHGG), for example. The remote nature of its core business has driven an increase in sales, which is reflected in its outstanding market performance. To wit, CHGG shares are up by 95% year-to-date.

But might sentiment be cooling down?

Needham analyst Ryan MacDonald believes investors are concerned about “the potential for uncertainty caused by COVID-19 to result in a sharp decline in enrollments for the fall semester.”

However, MacDonald thinks the concerns are misplaced. While acknowledging “individual schools recently have reported issues with lower enrollments,” the analyst argues there’s a reassuring explanation for the declining figures. According to survey data recently released by Eduventures Research, enrollments are “not so much declining, but shifting towards in-state schools away from out-of-state public and private universities.”

Among the 49,277 college-bound high school students surveyed, there was a 6% year-over-year increase in the number of students deciding to enroll in an in-state public institution compared to a 5% year-over-year decline in the number of students picking an out-of-state public university. Additionally, there was a 3% year-over-year drop when it came to private university attendance.

“In our view,” the 5-star analyst said, “This alleviates concerns of a sharp decline in enrollments for the fall semester, which we view as the greatest near-term risk to our investment thesis on Chegg... When combining this with Chegg's multiple levers to drive subscriber growth (international, account sharing, and Mathway adoption) and ARPU expansion (Study Pack and Thinkful adoption), We believe Chegg can maintain elevated subscriber growth.”

“As such,” MacDonald concluded, “Chegg remains our Conviction List idea.”

Unsurprisingly, then, MacDonald keeps his Buy rating as is, alongside a $100 price target. What’s in it for investors? Potential upside of 39%. (To watch MacDonald’s track record, click here)

Does the rest of the Street beg to differ? Hardly. Based on 10 Buys and 2 Holds, Chegg has a Strong Buy consensus rating. A 29% premium could be added to the shares, should the $95.25 average price target be met over the next 12 months. (See Chegg stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.