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In a report published Thursday, Bank of America analyst Sara Gubins downgraded the rating on
ITT Educational ServicesESI from Buy to Neutral, and lowered the price target from $42.00 to $36.00.
In the report, Bank of America noted, “On 2/26, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against ESI claiming violations of the Consumer Financial Protection Act (CFPA). While the news is not a surprise, there are claims raised in the suit that could generate negative publicity: high origination fees on the 2009 RSA loan program and claims that students did not understand that non-interest bearing loans would convert to interest bearing loans. We are concerned negative publicity could impact student demand in an already fragile market and hence lower our rating to Neutral. We have already received an invitation for a call the CFPB will host on this (no date set).”
ITT Educational Services closed on Wednesday at $32.40.
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