Tipping Point in Enrollment Starts Expected in Education: A Wall Street Transcript Interview with Jeffrey M. Silber, Managing Director and Senior Analyst at BMO Capital Markets Corp.
67 WALL STREET, New York - August 30, 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: K12, Inc. (LRN), Apollo Group Inc. (APOL), Bridgepoint Education, Inc. (BPI), Grand Canyon Education, Inc. (LOPE), American Public Education, Inc (APEI), DeVry, Inc. (DV) and many more.
In the following excerpt from the Education Report, an expert analyst discusses the outlook for the sector for investors:
TWST: How are trends impacting stock valuations and investor interest? I would think they'd be reluctant to be in the space.
Mr. Silber: Yes, and that has been very true for the past two years. Interestingly, a couple of months ago sentiment started to change. You had a number of technical analysts highlight this sector as being a drastic underperformer.
Virtually every other sector was hitting 52-week highs, so people were looking for sectors that did not, and certainly this was at the top of that list. So you started to see some interest pick up.
You also started to see expectations for a tipping point, where, yes, enrollments or starts are still declining, but maybe the rate of decline will start to get less worse. We think that will actually happen after all these companies report their calendar 2Q numbers. I think this will probably be the worst of the year-over-year decline in starts for most companies. Again, they're not going to grow, but the rate of decline will get less worse, and that could be an inflection point for these names.
We've also seen a couple of positive regulatory developments. Just recently, the accrediting bodies for both Apollo Group's (APOL) University of Phoenix and Bridgepoint Education's (BPI) Ashford University came out with some positive rulings, which at least helped take away one of the big risks that those schools would potentially lose their accreditations. That does not look likely now, and that was a nice catalyst for those stocks as well.
So yes, sentiment has been negative for a long time, but we are starting to see some green shoots. I'm not going to lie and say my phone's ringing off the hook, but I'm talking to people that either I've never spoken with or I haven't spoken with in years that are starting to come back into the group. As of this morning, this group has actually outperformed the S&P 500 for the year...
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.
