Deutsche Bank Initiates Coverage on Apollo Group (APOL) with a Buy
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Deutsche Bank initiates coverage on Apollo Group (Nasdaq: APOL) with a Buy. Price target $80.
Deutsche analyst says, "We initiate with a Buy and $80 PT due to what we believe will be a longer-than-expected high-growth period for enrollment and an attractive relative valuation. UPX's high part-time exposure (>50%) also provides the more economically sensitive exposure we want for this part of the cycle. We initiate with a 3QE EPS of $1.13 (penny above Street), 4QE EPS of $1.00 ($0.05 above) and CY09E of $4.37 (Street $4.21), due to our higher-than-consensus revenue expectations."
"In our industry initiation out today, we show how correlated enrollment growth is to the unemployment rate, suggesting another year of accelerating growth for the industry and UPX. We also believe, based on our proprietary checks, that new enrollment trends quarter-to-date are tracking ahead of fiscal 2Q. With enrollment such a driver of the share price, this is a key reason for our Buy. UPX's brand is searched in Google 4.4x more than the next-highest for-profit university (DeVry) and UPX is the only school with a national campus footprint and strong online platform. We believe this should enable UPX to maintain or grow its industry lead."
Apollo Group, Inc. (Apollo Group) is a private education provider. The Company offers educational programs and services at the high school, undergraduate and graduate levels online and on-campus through its wholly owned subsidiaries, The University of Phoenix, Inc. (University of Phoenix), Institute for Professional Development (IPD), The College for Financial Planning Institutes Corporation (CFP), Western International University, Inc. (Western International University), and Insight Schools, Inc. (Insight Schools), and through its 80.1% owned subsidiary, Apollo Global, Inc. (Apollo Global).
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