UPDATE: Citigroup Downgrades ITT Educational Services to Sell on Loan Guarantee Challenges
Citigroup downgraded ITT Educational Services, Inc. (NYSE: ESI) from Neutral to Sell and lowered the price target from $24.00 to $13.00.
Citigroup commented, "Shares of ESI are down 21% this week triggered by a $46MM settlement with Sallie Mae (SMI) announced over the weekend related to underperforming student loans. ESI is taking a $22MM charge ($13.2MM net of tax or $0.56) in Q4 following overly optimistic assumptions on loan performance and legal fees. Given ESI has roughly $500MM of additional guaranteed loans that may also underperform, we see material risk of more write-downs and loan guarantee payments. While shares are down 80% from their Feb peak, we still see additional downside and are downgrading to Sell."
ITT Educational Services closed at $15.19 on Tuesday.
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