From Standard & Poor's Equity ResearchBANC OF AMERICA DOWNGRADES APOLLO GROUP TO SELL FROM BUY
Banc of America analyst Kevin Doherty tells salesforce there are several uncertainties that make it difficult to justify Apollo Group's (APOL) current valuation. He re-valuates his thesis on APOL and his concerns are: declining start growth impacting enrollment growth; increasing reliance on higher risk Axia College students; secular shift to a slowing growth profile; pace of internationall expansion; potential further deterioration in student lending environment.; corporate tuition reimbursement risk; and valuation.
Doherty cut his price target to 55 from 90. He remains cautious on the sector as a whole, but investors who are still looking for exposure to group with a 12-month time horizon, he rates ITT Educational Services (ESI) a buy.
LEHMAN UPGRADES DEVRY TO OVERWEIGHT FROM EQUAL-WEIGHT
Lehman analyst Gary Bisbee says Devry's (DV) industry-leading EPS growth, reasonable valuation, and strong defensive qualities should lead the shares to appreciate considerably over the next 12-18 months. He notes limited private loan exposure (5% of revenues) and the impact from loss of subprime loans (0.4% of revenues).
Bisbee says Devry is well into a turnaround with significant cost cuts and strong enrollment growth creating strong margin expansion, with significant upside left. He expects the company to maintain high single-digit starts and enrollment growth from high demand for its Tech/Accounting/Health programs and new campus growth.
He sees $1.72 fiscal year 2008 (June) EPS and $2.12 for fiscal year 2009, and has a 58 target price on the stock.
LAZARD DOWNGRADES AMYLIN PHARMACEUTICALS TO HOLD FROM BUY
Lazard analyst Matthew Osborne says FDA draft briefing documents regarding Amylin Pharmaceuticals (AMLN) were posted online at FDA website. He notes the bottom line for diabetes drugs in development with a safety concern or questionable safety is riskier endpoints based on reduction of macro-vascular events and costlier trials.
He says it remains unclear whether the agency views the company's exenatide LAR a drug in which substantial safety issues or questions arise. Osborne notes AMLN is in the midst of enrolling Phase III trials for exenatide LAR. He moves to the sidelines pending further evidence that safety does not appear to be a concern for exenatide LAR.