UPDATE: Morgan Stanley Downgrades Apollo Group to Equal-Weight on Visibility, Accrediting Challenges

Morgan Stanley downgrades Apollo Group, Inc.

from Overweight to Equal-weight. Morgan Stanley noted, "While a major restructuring program, a healthy balance sheet and lowered expectations may set the stage for a turnaround, limited visibility, declining revenue per student, and new accreditor problems make it difficult to recommend the stock with conviction. We therefore move to Equal-weight. While we made only modest changes to the operating model, we raised the discount rate and cut the terminal multiple to be more consistent with peers. … FQ1 results were in line with ests and new enrollments were slightly better. However, mgmt provided a guarded outlook for Q2, driven by lower rev per student (b/c of discounting) and potential for weaker starts (Dec below Q1)." Apollo Group closed at $20.94 on Tuesday.