Why American Public Education Shares Are Soaring Today

American Public Education Inc APEI shares are surging today. B.Riley Securities analyst Raj Sharma reiterated a Buy rating on the shares and raised the price target from $12 to $15.

Yesterday, the company reported 4Q/FY23 results, beating handily on top and bottom with 4Q revenue and adjusted EBITDA of $152.8 million and $25.7 million that compared to Street view of $150.5 million/$16.1 million.

Net course registrations for APUS (the Military mainstay) were up 4% Y/Y, Rasmussen (RU) enrollment was down 10% Y/Y, and Hondros College of Nursing (HCN) enrollment was up 19% Y/ Y.

The analyst said RU also showed significant improvement in critical NCLEX test scores, with 26 of 29 programs above state thresholds and all Honduras PN and RN programs exceeding thresholds.

While APEI guided to positive 1Q24 enrollment momentum for APUS and HCN, it guided RU to an overall 6% Y/Y decline in enrollment, down 11% Y/Y for on-ground healthcare and flat for online, noted the analyst.

According to the analyst, 4Q was marked by sequential increases in segment profitability for three of its four divisions, with Rasmussen and HCN turning positive in EBITDA margin. 

The analyst has raised the price target, believing that APEI is turning a corner, with three of its four divisions continuing to show positive enrollment momentum. 

The analyst also noted that APEI will likely show over $2/sh in free cash flow (FCF) this year, implying it's trading at ~3x FY24E EBITDA.

Barrington Research analyst Alexander Paris maintained American Public Education with an Outperform and raised the price target from $8 to $15.

Truist Securities analyst Tobey Sommer maintained American Public Education with a Hold and raised the price target from $6 to $15.

Price Action: APEI shares are trading higher by 34.78% at $15.32 on the last check Wednesday.

Image: Shutterstock/ MD Duran