Deutsche Bank Downgrades DeVry Education, Sees 'Slower Growth'

In a report published Monday, Deutsche Bank analysts downgraded the rating on DeVry Education Group Inc DV from Buy to Hold, while reducing the price target from $40 to $34. The rating had been upgraded in September 2014, with the analysts expecting mid-teens EPS growth in FY15 and FY16. DeVry was also expected to report good growth at the Caribbean Med Schools, Chamberlain (nursing) and Brazil. "But all three of these growth assets have slowed since our upgrade," the analysts pointed out. Worsening demand trends and increased non-profit competition are expected to result in increased downsizing and restructuring at DeVry U and Keller. "Losses at BTM as revs decline; continued slower growth at Chamberlain, declining enrollment at DMI due to competition, and volatility in Brazil due to regulatory changes," are expected to negatively impact DeVry's performance. The EPS estimate for FY15 has been reduced from $2.64 to $2.59, while that for FY16 has been raised from $2.60 to $2.65 to reflect modestly better growth in Brazil. The analysts expressed concern regarding "any rise in the share price from any future improvement" being "short lived," with investors viewing that as a buying opportunity.