) to neutral from buy and cut its $44 price target to $33.
Analyst Howard Block says he downgraded the stock because the recent Dept. of Education graduation data showed material deterioration at Career Education schools. He thinks value proposition for the company's customers has eroded, and will continue to erode, underscoring the dangers of aggressive growth. He says shareholder value can't be enhanced if customer's value proposition is deteriorating.
Block thinks lower enrollment momentum may cascade through the Street's 2005 estimates, and that investor expectations are too high on positive implications of recent announcements and more internal scrutiny. He sees earnings per share of $1.77 for 2004 and $2.30 for 2005.