2023-05-26 07:46:01 ET
Truist started for-profit university operators Strategic Education ( STRA ) and American Public Education ( NASDAQ: APEI ) at Hold in a note initiating coverage of the education sector.
Equity analyst Jasper Bibb said that he remains “intrigued by potential re-acceleration in AUS/NZ enrollment growth as international student flows normalize post-COVID” at Stategic Education. However, concerns on the overall industry and execution risk in terms of capitalizing on the reacceleration keep him on the sidelines.
Bibb assigned an $85 price target to Strategic Education ( STRA ).
For APEI, Bibb lamented the “value-destructive Rasmussen acquisition” that has crushed the stock in recent months. He told clients that this impact has obscured the company’s earnings power and hit its credibility in forecasting the business.
“In our view, potential to unlock significant earnings growth is offset by APEI's lack of credibility forecasting forward business trends, regulatory overhangs at multiple portfolio schools and potential for further margin compression if RU enrollment declines do not stabilize,” he concluded. “We would look for multiple quarters of improved enrollment trends to become more constructive.”
Bibb assigned the stock a $6 price target and a Hold rating as he awaits clarity on enrollment trends.
More on for-profit education operators:
Strategic Education: Increased Enrollments And New Partnerships, But Little Growth To Show
American Public Education stock slides over 45% after earnings miss
Seeking Alpha Quant ratings see APEI as a Strong Sell
For further details see:
Strategic Education, American Public Education started at Hold by Truist