UPDATE: J.P. Morgan Downgrades Strayer Education to Neutral, Lowers PT
In a report published Monday, J.P. Morgan & Co. downgraded its rating on Strayer Education (NASDAQ: STRA) from Overweight to Neutral, and lowered its price target from $110.00 to $55.00.
J.P. Morgan noted, “Friday morning STRA reported 3Q12 EPS of $0.36, above our estimate and STRA's guidance. 3Q12 new enrollments (starts) grew 4% y/y, a third consecutive quarter of growth. However, 4Q12 guidance of $1.43-1.45 is below prior consensus ($1.59) due to continuing enrollment challenges. STRA's 2013 outlook reflects no new campus openings, which impedes growth in our view. Also, STRA suspended its dividend for 2013. We had considered STRA's dividend unique in the sector. We like STRA's long-term focus on quality and superior student outcomes. However, given its growth and margin challenges, we are downgrading STRA to Neutral from Overweight. We think that low tuition schools (e.g., APEI, LOPE) will benefit in this environment.”
Strayer Education closed on Friday at $46.51.
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