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Nord Anglia Education Guidance Leaves Investors Nonplussed

Nord Anglia Education Guidance Leaves Investors Nonplussed

Shares of Nord Anglia Education Inc (NYSE: NORD) fell more than 2 percent as investors were unimpressed with the company's enrollment and FY2017 earnings guidance, which came in below expectations.

The company also announced new investment spending for partnerships and China overhead, while planning to ramp up its exposure to the local language Chinese market.

"While China likely represents the most attractive organic growth available to Nord anywhere in the world, the increased market exposure may be causing some investors to reconsider positions," Credit Suisse analyst Trace Urdan wrote in a note.

Nord's stock momentum has stalled as earnings growth slowed due to capacity additions in FY2017 more reliant on existing campus expansion and green-fields than acquisitions.

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However, Urdan reiterated Outperform rating on the stock saying, "We believe the market opportunity remains robust and the business model appealing and expect that once the company is able to pencil sufficient capacity additions for FY18 to suggest re-acceleration, the stock should respond in kind."

"Liquidity remains a stumbling block for the shares, but we believe the model is one that can produce highly consistent results through a variety of macro-economic circumstances for years to come," Urdan added.

However, the analyst cut the target price to $25 from $27. At last check, the stock was down 2.04 percent at $21.10.

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