UPDATE: Barrington Upgrades Rating on Capella Education Following Investor Meetings

In a report published on Wednesday Barrington upgraded its rating on Capella Education CPLA from Marketperform to Outperform and maintained their $53 PT on the company. In the report lead analyst Alexander Paris commented that, "Enrollment trends positive: While others in the group are still reporting lower enrollments, CPLA appears to have found its footing by approaching the market differently (brand building rather than simply purchasing leads from aggregators) and focusing on learner outcomes. After seven quarters of negative new student starts, the company, which reached the inflection point in Q3/12, has reported three consecutive quarters of positive new student starts and has guided Q2/13 to be up at a similar rate to Q1 (+8.2%), the fourth quarter of growth against relatively easy comps. The trick in 2H/13 will be maintaining this growth against growing year‐ago quarters, as industry demand is no stronger and competition is no easier. In our opinion, CPLA has reversed the negative trends by creating its own demand (“pull”) for its programs by changing its marketing mix away from lead aggregators (“push”) and investing in brand building (getting into the decision process earlier)." Capella Education closed on Wednesday at $43.89
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Posted In: Analyst ColorUpgradesAnalyst RatingsAlexander ParisBarrington
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