Differentiation Key to the Success of Education Companies: Having a Brand That Resonates with Students and Employers Critical to Creating Demand That Can Drive Enrollment Growth

Wall Street Transcript

67 WALL STREET, New York - September 9, 2013 - The Wall Street Transcript has just published its Education Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Gainful Employment Clarification - Enrollment and Retention Trends - Economic Recovery and Enrollment Trends - Growth Drivers in Chinese Education Sector

Companies include: FactSet Research Systems Inc. (FDS), IHS Inc. (IHS), Moody's Corp. (MCO), Apollo Group Inc. (APOL), Bridgepoint Education, Inc. (BPI), Strayer Education Inc. (STRA), Grand Canyon Education, Inc. (LOPE), American Public Education, Inc (APEI), DeVry, Inc. (DV), ITT Educational Services Inc. (ESI), Universal Technical Institute (UTI) and many more.

In the following excerpt from the Education Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You said you've had a cautious view on the group for a few years now. Are there any stocks that you would single out as being most promising?

Mr. Appert: Let me preface my comment by saying, at the moment we have no "overweight" ratings within the sector. I had a longstanding "overweight" rating on Grand Canyon Education (LOPE), and we downgraded it earlier this week primarily based on valuation. The stock is up 50% year to date; it was up almost 50% last year. It has been a phenomenal performer, and we decided it was appropriate to take some money off the table given the stock's huge outperformance. As a result, we currently have no "buy" ratings in the group.

That said, I do think that Grand Canyon and American Public Education (APEI) are two companies that, from a fundamental standpoint, are well-positioned, are differentiated in the crowded and competitive marketplace, have management teams that have executed extremely well, and have interesting secular growth stories behind them. It's just a question of timing and valuation in terms of being more involved.

At the opposite end of the spectrum, the companies that are more challenged - again, getting back to this recurring theme for me - are those with the least differentiated offerings in the most competitive part of the market. And again, the adult degree completion market is the area I would focus on as being the toughest. We have an "underweight" rating on Strayer and are cautious on "neutral"-rated Apollo and Bridgepoint.

TWST: Would you talk a bit more about what the growth stories are for Grand Canyon and American Public Education?

Mr. Appert: What is unique about Grand Canyon specifically is they have a very strong campus presence in the Arizona market....

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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