UPDATE: BMO Capital Markets Downgrades Education Management Following FY1Q14 Results

In a report published Friday, BMO Capital Markets analyst Jeffrey M. Silber downgraded the rating on

from Market Perform to Underperform, but raised the price target from $7.00 to $10.00. In the report, BMO Capital Markets noted, “Management said the most recent October start date was slightly positive y/y for the Art Institutes, and it expects overall starts declines to improve through the remainder of FY2014 - a good sign that starts declines may be troughing, although the timing of start dates is adding some noise to results. Tuition will be kept frozen at the Art Institutes, and management believes persistence initiatives are showing some positive results. We expect enrollment will continue to slowly decline, but note declines at EDMC have not been as bad as at most of its peers. In the meantime, we believe EDMC should continue to generate enough cash to meet interest requirements on its heavy debt load.” Education Management closed on Thursday at $15.30.