Universal Technical Institute Is Well Positioned & Patience Is Required: Analyst - Universal Technical (NYSE:UTI)

Rosenblatt analyst Steve Frankel reiterated a Buy rating on the shares of Universal Technical Institute Inc UTI and lowered the price target from $10 to $9.
The analyst said the company reported solid Q4 results consistent with its positive pre-announcement.
However, the analyst added that slower starts among the adult population continue to create headwinds, leading to some margin pressure over the next couple of quarters.
The fiscal year will tilt significantly toward Q4, which could account for roughly half of the year's Adj. EBITDA.
Given the double-digit decline in the share price, the analyst believes the bad news is fully priced in and continue to believe UTI is well positioned, with a growing portfolio of corporate partners, strong student outcomes and diversification into healthcare via the Concord acquisition.
While patience is required, the analyst remains a buyer of UTI.
Frankel added despite near-term headwinds, the company continues to deliver a high ROI educational experience, with a 60% graduation rate and with 82% of graduates employed in their chosen field of study, up 200 basis points year-over-year.
The analyst said the pipeline of prospect adult learners is improving but still below pre-COVID levels.
As a result, the analyst expects UTI on a standalone basis to face tough comparable sales in the first half of 2023, with results improving as high school grads enter in the back half of the year.
While UTI continues to execute strategically, the slower than expected growth of the adult learner population creates material near-term headwinds and the hoped for accretion from the Concord acquisition will take a couple of quarters to be realized, the analyst noted.
Still, the analyst sees the company well positioned for any economic downturn with a solid balance sheet and a growing portfolio of course offerings.
Price Action: UTI shares are trading lower by 2.20% at $5.77 on the last check Tuesday.
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