K12, Inc. (LRN) Sell-Off 'Overdone'; Wells Fargo Upgrades to Outperform

October 11, 2013 8:45 AM EDT
Get Alerts LRN Hot Sheet
Price: $34.41 -0.43%

Rating Summary:
    8 Buy, 2 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 2 | Down: 23 | New: 24
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Wells Fargo upgraded K12, Inc. (NYSE: LRN) from Market Perform to Outperform with a price target of $21-$25 (from $28-$33.) Analyst Trace A. Urdan thinks the recent sell-off is "overdone."

"We are upgrading our rating on LRN shares to Outperform from Market Perform following what we believe has been an over-reaction to the company's disappointing FY2014 guidance. We believe that the rapid deceleration in managed school enrollment is related to execution issues and not a sign of weakening demand. However, even a heavily discounted expectation of future demand suggests to us significant value in the shares. We are lowering our future expectation for enrollment growth to 6% and reducing our FY2014E EPS to $0.80 from $0.85 and FY2015E EPS to $0.89 from $1.00 in response to the company's guidance," said Urdan.

For an analyst ratings summary and ratings history on K12, Inc. click here. For more ratings news on K12, Inc. click here.

Shares of K12, Inc. closed at $18.37 yesterday.

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