UPDATE: BMO Capital Downgrades Lincoln Educational Services to Underperform Following 4Q12 Results and 2013 Guidance

BMO Capital published a report on Lincoln Educational Services LINC that downgraded the stock from Market Perform to Underperform and maintained its $4.00 price target. In the report, BMO Capital stated, "While the company yielded a sizeable 4Q12 upside EPS surprise, it was more due to cost controls as starts (excluding ATB and online students) fell 12% y/y – below guidance of down 8%. Management expects the starts decline to continue in 1H13 with expectations for a rebound in the second half of the year. Although a similar sentiment was expressed a year ago at this time, that did not occur in 2012, though we believe trends will continue to get “less worse” as 2013 progresses. The company has done an admirable job, in our view, in managing its cost structure, but at 38% capacity utilization, it gets more difficult to do so without more drastic moves. We believe the stock is being supported by its dividend yield (4.6%), as well as speculation for a going-private transaction." Lincoln Educational Services closed Wednesday at $6.17.