Deutsche Downgrades Xueda Education (XUE) Following Layoffs

Deutsche Bank downgraded shares of Xueda Education (NYSE: XUE) to a Hold rating from its previous rating of Buy and reduced its price target slightly from $4.54 to $4.17.

The firm notes that there is limited visibility on a sales recovery until the second half of 2012. Deutsche also believes that sales will be worse than expected and margin pressure will be high due to company restructuring its sales force.

The restructuring of the sales force caused the company to cut many of its sales personal. With the company's revenue largely based off of their sales force, Deutsche forecasts that it will have a serious impact on top-line growth.

Deutsche Bank cut its 2011 and 2012 revenue estimates by 8 percent and 13 percent to $220 million and $304 million.

For more ratings news on Xueda Education click here and for the rating history of Xueda Education click here.

Shares of Xueda Education closed at $4.54 yesterday.

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