Shares of Santa Ana-based Corinthian Colleges Inc. rose Friday after an analyst expressed confidence that returning Chief Executive Jack Massimino could turn around the struggling vocational school operator.
Corinthian’s shares closed up more than 7% to a market value of $425 million.
Robert Wetenhall of RBC Capital Markets lifted his rating on Corinthian to “outperform” from “underperform.”
Wetenhall called the Everest Colleges parent “speculative but worth the risk” based on recent management changes, and said “excessively low investor expectations” will lead Corinthian to outperform.
The analyst called Corinthian “speculative but worth the risk” based on its recent management changes.
In November, Massimino moved from chairman to chief executive, replacing Peter Waller.
Massimino served as chief executive from late 2004 to mid-2009, overseeing boom years at Corinthian, which runs more than 100 campuses in the U.S. and Canada offering degrees in information technology, construction, healthcare and other areas.
It was the second executive shift at Corinthian late last year. In October, Matt Ouimet stepped down as president and chief operating officer. His positions weren’t filled.
Corinthian and other for-profit schools face new federal regulations that stand to take effect in 2011 and 2012.
The rules stand to limit recruiting efforts and could cut off federally-backed loans to schools that graduate too many students who can’t pay back loans.
In August, an Education Department report cited Corinthian as having one of the lowest student loan repayment rates among publicly traded school operators.
The company also is seeing a slowdown in growth.
For the three months through December, the company projected profits of $17.4 million to $20 million, which would be down by more than half from a year earlier.
Corinthian also warned of a potential 15% to 17% drop in enrollment for the current quarter from a year earlier.
The company is set to report results on Feb. 1.
