UPDATE: UBS Downgrades ITT Educational (ESI) to Sell; Cites Concerns with Private Loans

UBS downgraded ITT Educational Services (NYSE: ESI) from Neutral to Sell with a price target of $70.00.

UBS analyst says, "We see greater risk to the downside following the ~28% stock price increase since June after the release of weaker than expected gainful employment rules. We are downgrading because: 1) we see regulatory risk specific to the use of private loans (from the Consumer Financial Protection Bureau and state attorney generals); 2) potential Pell Grant funding cuts given federal efforts to reduce the deficit; 3) greater operating deleverage than expected; and 4) continued new start declines."

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