Analysts Dissect Apollo Education's First Quarter Results

On Tuesday, Apollo Education Group APOL released its first quarter results.

The company reported an EPS of $1.04, ahead of the Street's estimate of $0.90. Revenue missed the Street's estimate by $4.28 million coming in at $856.3.

Compass Point Research: Moving to Neutral

Michael Tarkan, analyst at Compass Point Research, raised his rating on Apollo Education to Neutral from Sell, and increased the price target to $30 from a previous $20. The analyst noted the company posted a second consecutive quarterly beat driven by lower than expected expenses.

“We continue to expect top-line pressure for the foreseeable future driven by a mix of recruiting and regulatory challenges" he wrote in a research report, "but at this point, we believe the company's capital and expense flexibility, combined with a reasonable valuation, warrant a more neutral view."

Related: Apollo Education Group Rises 3% After Q1 Earnings Beat

Tarkan had a cautious tone for investors that have a longer-term horizon.

“Over the longer term, we continue to expect increasing competition from both traditional and non-traditional players will step up and impede the company's forward growth rates," he added, "but for now, that should have less of an impact over the next 12 months.”

The analyst raised his FY14 and FY15 operating EPS estimates to $2.15 and $1.70, respectively, from an initial $2.05 and $1.40.

Deutsche Bank: Maintain Hold

Paul Ginnochio, analyst at Deutsche Bank DB maintained a Hold rating and $28 price target following the company's quarterly results.

“We maintain our Hold rating as we do not expect the University of Phoenix to return to positive new enrollment growth this year or next,” he wrote in a note on Tuesday.

The company is also operating in an extremely difficult environment that is hard to predict.

“We had expected the improving U.S. employment market and less bad Google keywords trends for Univ of Phoenix to translate into lessening new enrollment declines," he added. "The fact that trends did not improve suggest how competitive the environment is.”

Elsewhere on the Street

Following the quarterly results, a number of analyst firms have changed their price targets.

Piper Jaffray PJC maintained a Neutral rating and raised its price target from $24 to $28.

Stifel maintained a Buy rating and raised its price target from $30 to $35.

JPMorgan JPM maintained an Overweight rating and raised its price target from $29 to $32.

BMO Capital Markets maintained an Outperform rating and raised its price target from $32 to $35.

Shares of Apollo Education surged more than 12 percent to new 52 week highs on Wednesday at $31.94.