Oppenheimer Comments On Strayer Education Following Earnings Report

Strayer Education STRA delivered 4Q10 EPS of $2.73, which exceeded its estimate/consensus of $2.66/$2.64. Revenue of $172.0M was below Oppenheimer's estimate/consensus of $175.2M/$172.8M and a lower share count relative to its estimate represented $0.09 of EPS outperformance. STRA's lower enrollment growth trends were fairly consistent across both geographies and programs. Longer-term visibility remains low as current new enrollment trends are significantly below what STRA has experienced in the past. Oppenheimer is modeling enrollment growth to trough in mid-2011 and rebound through 2012, though conviction on timing and magnitude are low. Oppenheimer is tempering its 2011 revenue/EPS estimates to $642M/$8.50 from $668M/$8.80, respectively. Oppenheimer's 2012 EPS estimate tweaks to $9.20 on a maintained 5%+ revenue rebound growth outlook, though regulatory and new start uncertainty tempers its conviction. Oppenheimer has a Perform rating on STRA STRA closed Friday at $136.62