Embattled vocational school operator Corinthian Colleges Inc. on Monday saw one analyst downgrade his rating on the company’s shares while another cut his price target.
An analyst at San Francisco-based ThinkEquity LLC downgraded Corinthian from “buy” to “hold” saying the company could be more negatively affected by new regulations than previously anticipated.
An analyst at Arlington, Va.-based FBR Capital Markets Corp. reiterated an “underperform” rating on Corinthian and cut his price target for the stock to $4.50 from $13.
The analyst cited slowing student enrollment at Corinthian, whose shares were trading at about $4.50 in afternoon New York trading on a market value of $400 million.
Corinthian’s shares closed down 1% Monday after plummeting last week.
Corinthian and other school operators, which saw big growth during the recession, have come under fire for students who took on more debt than they could afford.
The company runs more than 100 campuses in the U.S. and Canada that offer degrees in healthcare, criminal justice and other areas.
Last week, an Education Department report showed that fewer than 20% of students at Corinthian and other schools are repaying federal loans.
The department plans to use the loan repayment figures to determine whether school operators can remain eligible for federal loans.
Corinthian gets the bulk of its revenue from students with federal loans.
On Friday, Corinthian spooked investors further with a quarterly profit miss and an uncertain outlook for the current quarter.
For the three months through June, Corinthian reported a profit of $33.9 million, up 46% from a year earlier but short of the $34.8 million analysts expected on average.
Revenue was up 36% to $482.7 million and topped the $477.1 million Wall Street expected.
The company forecast a profit for the three months through September of $33.9 million to $36.6 million. That was well below the $41 million analysts had been expecting.
Revenue is seen coming at $492 million to $502 million, topping the $491.7 million analysts had been expecting.
“We are actively monitoring proposed changes in federal regulation and congressional actions that pertain to private sector education,” the company said. “Given the information currently available, we are unable to gauge the full impact of these proposals on our students and the company.”
