Piper Jaffray Neutral On Apollo Group (APOL)

Piper Jaffray has a Neutral rating on shares of Apollo Group, Inc. APOL and a $45 price target.

In a note to clients, Piper Jaffray writes, "APOL reports its F2Q results before the market open on Tues, 3/29, with a conference call at 8AM ET. We look for EPS of $0.62, a 25% y/y decline, vs. consensus of $0.70 (within an unusually broad range of $0.52 to $0.92). Our model assumes a 39% y/y drop in starts, an 11% decline in enrollments and a 4.2% decline in revenues.

The primary focus for investors will be the trend in enrollments and the company's ability to manage costs (and margins) in the face of declining revenues. The stock responded well to F1Q results, as aggressive cost management efforts translated into slight upside in profitability. We believe the company could be set-up for similar performance in F2Q.

We like the proactive steps management is taking to right-size costs and address the evolving regulatory and competitive landscape. That said we believe the stock may be stuck in a trading range until we get closer to a rebound in earnings growth, which we do not anticipate until 2012."

Shares of APOL lost 55 cents yesterday to close at $41.21, a loss of 1.32%.