In a note released Tuesday morning, Bank of America analyst Sara Gubins downgraded shares of ITT Educational Services ESI from Neutral to Underperform and lowered the price target from $16 to $7.
The downgrade comes after the company announced CEO Kevin Modany will be resigning, effective February 4, 2015.
Gubins noted that if the company is able to hit her estimates, then current levels are attractive. However, she noted that ITT faces a number of headwinds including the search for a new CEO, weak fundamentals and numerous regulatory issues.
The potential regulatory issues the company faces due to a delay in filing audited 2013 financial statements include heightened cash monitoring, provisional certification status, and even being unable to participate in federal financial aid programs.
Amid the downgrade, shares of ITT have continued to fall ~2.5 percent in Tuesday's pre-market after closing down an abysmal 46 percent on Monday.
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