UPDATE: Stifel Nicolaus Raises PT on K12 on Business Model Conviction

In a report published Monday, Stifel Nicolaus analyst Jerry Herman reiterated a Buy rating on K12

, and raised the price target from $28.00 to $33.00. In the report, Herman noted, “In fact the outlook for the core managed school business heading into next year is looking stronger thus improving prospects for another strong year of earnings and EBITDA growth and a catalyst for the stock, in our view. Although controversy and volatility in the shares is expected to continue, we believe that the company is well positioned to facilitate school choice and participate in the growth of online and individualized learning and the shift to digital delivery of educational content. Growing acceptance of this modality and recognition of its potential for educational efficacy and cost efficiency is driving the market. Moreover, improving profitability (margins) from a low base driven by operating and organizational efficiency and leveraging of the cost structure should drive high rates of EPS growth, in our opinion. Short covering in a rising market has and could continue to contribute to price strength.” K12 closed on Friday at $29.61.