UPDATE: BMO Capital Markets Reiterates Outperform Rating, Lowers PT on Apollo Group

In a report published Wednesday, BMO Capital Markets reiterated its Outperform rating on Apollo Group APOL, but lowered its price target from $34.00 to $30.00. BMO Capital Markets noted, “Starts fell 15.1% y/y, worsening from FY4Q12's 13.7% y/y drop though better than our 17.1% estimate (consensus unavailable). Total enrollment fell 14.3% y/y, slightly worse than our -13.5% estimate. The ‘upside surprise' (at least versus our estimates) was mostly margin driven, as the company garnered more benefits from its cost-saving program than originally anticipated; management now expects APOL to generate $200 million of the expected $300 million in annual savings in FY2013, up from its prior $150 million guidance. Nevertheless, FY2013 revenue guidance was reduced owing to increased discounts and a ‘soft' December, while operating income guidance was reduced owing to the lower revenue base and expected increase in marketing. While business trends are still tough, we do believe trends will get ‘less worse' as we progress throughout the year.” Apollo Group closed on Tuesday at $20.92.