Despite Upgrades, Investors Doubt Apollo After Sales Miss
A revenue miss from Apollo Education Group, $APOL, has investors questioning the worth of the company’s online college degrees and its long-term business model, despite a flurry of analysts upgrades Wednesday morning.
— Matt Herrera (@Hedgly) Apr. 1 at 04:11 PM
Shares fell more than 7% Wednesday to $32.59 after the company behind the University of Phoenix, Carnegie Learning and other online institutions reported second quarter sales that fell short of analyst’s expectations. Apollo reported $0.28 EPS, excluding special items, on $679.1 million in sales. Analysts had expected $0.19 EPS on about ten million more in revenues, according to stats at the Analyst Ratings Network.
Apollo’s EPS excluded the impact of restructuring costs, acquisition costs, legal expenses and a beneficial tax settlement. Including those items EPS fell to $0.13.
Apollo reaffirmed guidance. The company expects sales for the year to fall between $3 billion and $3.1 billion. It anticipates operating income, excluding special items, to come in between $400 million and $450 million.
Analysts upgraded the stock this morning following yesterday evening’s earnings. Analysts at Stifel Nicolaus have a buy on the stock and boosted their price target Wednesday by $3 to $38, according to the Analyst Ratings Network. Wells Fargo analysts upgraded the stock to outperform and raised their price target $3 to $39.
— The Economic Daily (@Econdaily) Apr. 2 at 08:11 AM
Yesterday, analysts at BMO Capital Markets boosted their price target $5 to $40. Analysts saw positive news in new student starts and cost management.
But cashtaggers complained that course enrollment had tumbled. Enrollment at the University of Phoenix Degree program dropped 16.8% from the same period a year ago. New degreed enrollment fell 16.5% from the prior year.
@NYCStox worked in it right after college in 2010, was dying then, friends who work there say its much worse, 10% grad rate, 50% default
— Snorticus (@Snorticus) Apr. 1 at 07:46 PM
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