Piper Jaffray Initiates Coverage on Education Management (EDMC) with an Overweight; Distinctive Positioning

November 11, 2009 7:05 AM EST

Piper Jaffray & Co. initiates coverage on Education Management (Nasdaq: EDMC) with an Overweight. Price target $30.

Piper analyst says, "Education Management serves a broad addressable market, with four distinct brands aligned by program, degree, and student demographics: The Art Institutes, Argosy University, Brown Mackie Colleges, and South University. This distinctive positioning affords Education Management the advantage of casting a wider net to bolster enrollment growth, in our view. Margin Expansion Story. We believe the company has a scaleable business model with the ability to expand operating margins over time...The company's rapidly growing online business (23% of total enrollment) should post solid growth from here, as the company leverages the online businesses of its multiple brands. Online enrollment was up 60% y/y at the beginning of Oct. 2009.

"We understand the company expects its FY08 CDR to be flat with FY07 levels of 8%, which we believe is impressive given the challenging credit environment represented by the FY08 CDR default period, Oct. 2007-Sept. 2009; this also compares favorably with the FY07 national proprietary school CDR of 11%."

To see more analyst ratings on EDMC Click Here.

Education Management LLC provides post-secondary education in North America. It offers campus-based and online instructions to enable students earn undergraduate and graduate degrees, including doctoral degrees and certain specialized non-degree diplomas in various disciplines.

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