UPDATE: Bank of America Reduces PO to $3.75 on Education Management Corporation

Bank of America reiterated its Underperform rating on Education Management Corporation EDMC and reduced its price objective from $4 to $3.75. Bank of America noted, "We are lowering estimates on lower start & enrollment expectations. We are below updated FY13 guidance of $0.50-0.57 despite our assumption that operating costs fall by $180mn on a YoY basis. EDMC is cautiously optimistic that starts could turn positive in 2H13. We are more conservative and forecast starts to turn positive in 3Q14. We believe EDMC will continue to struggle near term as tuition rates at its flagship Art Institutes (54% of enrollment) are relatively high in a period in which demand for for-profit education is becoming more price elastic." Education Management Corporation closed at $3.41 on Thursday.