UPDATE: Morgan Stanley Downgrades Strayer Education to Underweight, Names $30 PT as New Plan Brings Risk to LT Model

In a report published Friday, Morgan Stanley analyst Suzanne E. Stein downgraded the rating on

from Equal-Weight to Underweight, but named a $30.00 price target. In the report, Morgan Stanley noted, “Margin compression could be severe. Despite implementing an aggressive price strategy (via scholarships), start trends have weakened. A new plan to cut the sticker price for undergrads by 20%, and offer a 25% scholarship on top may stabilize enrollments but creates a mismatch between the cost structure and the company's top line prospects, despite a plan to cut $50M overhead. We move to Underweight with a $30 price target. Current valuation in our view does not reflect the downside. Given aggressive pricing strategies of competitors, lower prices may not be enough to stabilize the business.” Strayer Education closed on Thursday at $39.42.