Education Stocks Getting Bullied Around on Credit Suisse Downgrades

April 21, 2009 12:27 PM EDT

Education stocks are getting beaten down today on the back of a bearish Credit Suisse note. The firm downgraded Apollo Group (Nasdaq: APOL), ITT (NYSE: ESI) and Lincoln (Nasdaq: LINC) from Outperform to Neutral, citing rising concerns of a more challenging legal/regulatory environment.

With earnings in these names just over the horizon, Credit Suisse believes the Street's expectations for the group "are approaching levels that leave very little room for upside." With last night's announcement that the Department of Education has named Bob Shireman as deputy undersecretary to advise the DoE on college financial issues, the firm believes numerous programs will be placed under review. Such proposals could aim at tightening restrictions on incentive compensation/marketing practices and require schools to disclose more "quality-related" metrics.

Interestingly, we are seeing somewhat of an analyst duel this morning as Deutsche Bank initiated coverage on several of these Education stocks with a more bullish tone. The firm started ITT and Apollo at Buy, and DeVry at Hold.

Here is how some education stocks are performing today:

• Apollo - down 7.2% to $61.02
  
• ITT Educational Services - down 8.7% to $97.57
  
• DeVry (NYSE: DV) down 8.2% to $41.97
  
• Strayer Education (Nasdaq: STRA) down 7.3% to $172.51
  
• Corinthian Colleges (Nasdaq: COCO) - down 9.6% to $16.27
  
• Lincoln Educational Services - down 13.2% to $14.78

Obviously, traders are putting more weight on the Credit Suisse call today.

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