UPDATE: Deutsche Bank Cutting Price Target On Apollo Group (APOL)

Deutsche Bank is cutting its price target on shares of Apollo Group APOL to $55 from $60 after the company announced lowered 2012 guidance. It has a Buy rating on shares. In a note to clients, Deutsche Bank writes, "Despite the lower than expected FY12 guidance, we continue to like APOL due to the significant changes already made to their business model and associated earnings reset particularly vs peers, and attractive valuation for what we believe will be trough earnings. Our 3QE EPS goes from $1.24 to $1.32 (Street at $1.37), 4Q goes from $0.72 to $0.83 (Street $0.94) and FY12E EPS goes from $4.26 to $3.43 (Street $4.05). We maintain our Buy but have lowered our price target from $60 to $55 due to our lower estimates." Deutsche Bank goes on to say, "We find APOL attractive as 1) it has already addressed most of the regulatory concerns and changes via changes to the business, and 2) Gainful Employment's expected impact on EPS is relatively minor. Our $55 target reflects a 16x multiple of estimated trough EPS and is supported by our DCF analysis (see full detail on page 11). Downside risks include: an inability to stabilize or grow quality enrollment post the reset of the business model, more impact from business model changes than expected or from Gainful Employment, 90/10, cuts to Pell Grants leading to lower enrollment or more student debt, or strong job growth." Shares of APOL are up 47 cents in pre-market trading to $41.02, a gain of 1.16%.