Deutsche Bank Downgrades Apollo Education (APOL) to Sell, Stuck between 90/10 and low
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Price: $21.35 +1.33%
Rating Summary:
4 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Rating Summary:
4 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
Trade APOL Now!
Deutsche Bank downgraded Apollo Education (NASDAQ: APOL) from Hold to Sell with a price target of $34.00 (from $25.00).
The firm comments, "APOL's inability to offer scholarships, due to 90/10 ratio pressures, is hurting its ability to compete against a growing number of lower cost online providers. Without 90/10 relief, APOL will be challenged to grow; yet with 90/10 relief and lower tuition, APOL's profitability would likely significantly erode. We have lowered our estimates to reflect the inability to lower price."
Deutsche Bank also warned about a cheaper, public online universities in the next 2-3 years. "With Cal State opening its online doors in Spring’13, Univ of Wisc. and Univ. of South Carolina in Fall’13, we estimate by YE13 that over 75% of the US by population will have a State University providing cheap in-state online programs," the analyst said. "These public online universities also come with stronger brands. We think their overlap with University of Phoenix’s (UoP) target student is 20-40%, making future growth for UoP unlikely without lower prices and increased marketing."
The firm's FY13E revs/EPS estimates declines from $3,904m/$2.89 to $3,894/$2.71 vs Street $4,072m/$3.10. FY14E declines from $3,792m/$2.81 to $3,721/$2.01, versus consensus at $4,157m/$3.29.
For an analyst ratings summary and ratings history on Apollo Education click here. For more ratings news on Apollo Education click here.
Shares of Apollo Education closed at $30.39 yesterday, with a 52 week range of $25.77-$58.29.
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The firm comments, "APOL's inability to offer scholarships, due to 90/10 ratio pressures, is hurting its ability to compete against a growing number of lower cost online providers. Without 90/10 relief, APOL will be challenged to grow; yet with 90/10 relief and lower tuition, APOL's profitability would likely significantly erode. We have lowered our estimates to reflect the inability to lower price."
Deutsche Bank also warned about a cheaper, public online universities in the next 2-3 years. "With Cal State opening its online doors in Spring’13, Univ of Wisc. and Univ. of South Carolina in Fall’13, we estimate by YE13 that over 75% of the US by population will have a State University providing cheap in-state online programs," the analyst said. "These public online universities also come with stronger brands. We think their overlap with University of Phoenix’s (UoP) target student is 20-40%, making future growth for UoP unlikely without lower prices and increased marketing."
The firm's FY13E revs/EPS estimates declines from $3,904m/$2.89 to $3,894/$2.71 vs Street $4,072m/$3.10. FY14E declines from $3,792m/$2.81 to $3,721/$2.01, versus consensus at $4,157m/$3.29.
For an analyst ratings summary and ratings history on Apollo Education click here. For more ratings news on Apollo Education click here.
Shares of Apollo Education closed at $30.39 yesterday, with a 52 week range of $25.77-$58.29.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
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