Barclays Maintains an 'Equalweight' on Career Education (CECO); Near-term Profit Rebound Unlikely
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Price: $71.52 -2.03%
Rating Summary:
10 Buy, 9 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
10 Buy, 9 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Barclays maintains an 'Equalweight' on Career Education (NASDAQ: CECO) price target lowered from $13 to $10.
Barclays analyst says, "Yesterday, CECO shares fell 48% (vs. +1.6% for the S&P) following the resignation of CEO Gary McCullough and preannouncement of disappointing 3Q'11 results. Enrollments and especially margins were far weaker than expected, and we see little chance of a near-term rebound in either due to changes being implemented in improve the business. We believe that the negative findings from an internal investigation into job placements and its leadership change may result in a more detailed future restructuring, which could further push out the timing of a fundamental rebound."
"With that said, we believe the stock clearly prices in a distressed situation after yesterday's sharp sell-off. The company's $448M of net cash equates to ~72% of its equity market cap, leaving the business ex the cash valued at only ~3x CY'12 EPS and ~2.5x CY'12 FCF...While a major restructuring could hurt earnings and cash flows for several years into the future, we suspect that there is real value in the stock at current levels for patient investors willing to wait for a long turnaround to occur."
For more ratings news on Career Education click here and for the rating history of Career Education click here.
Shares of Career Education closed at $8.32 yesterday.
Barclays analyst says, "Yesterday, CECO shares fell 48% (vs. +1.6% for the S&P) following the resignation of CEO Gary McCullough and preannouncement of disappointing 3Q'11 results. Enrollments and especially margins were far weaker than expected, and we see little chance of a near-term rebound in either due to changes being implemented in improve the business. We believe that the negative findings from an internal investigation into job placements and its leadership change may result in a more detailed future restructuring, which could further push out the timing of a fundamental rebound."
"With that said, we believe the stock clearly prices in a distressed situation after yesterday's sharp sell-off. The company's $448M of net cash equates to ~72% of its equity market cap, leaving the business ex the cash valued at only ~3x CY'12 EPS and ~2.5x CY'12 FCF...While a major restructuring could hurt earnings and cash flows for several years into the future, we suspect that there is real value in the stock at current levels for patient investors willing to wait for a long turnaround to occur."
For more ratings news on Career Education click here and for the rating history of Career Education click here.
Shares of Career Education closed at $8.32 yesterday.
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