Piper Jaffray Assumes Apollo Group With Neutral Rating (APOL)

Piper Jaffray is out with a research report this afternoon, where it assumes shares of Apollo Group Inc. APOL with a Neutral rating, from Overweight; it has a $46.00 price target on the stock, down from $54.00. The PJ analysts said that they like the proactive steps Apollo is taking to address recent criticisms against the industry's recruitment and operating practices, including the introduction of an orientation program designed to better measure student qualifications to complete an Apollo degree program. The analysts believe that these efforts will position the company well for a reacceleration in revenue and earnings growth in F2012 and beyond. Over the near-term they anticipate slowing revenue growth and pressure on margins as a result of regulatory/compliance initiatives and the new student orientation program. A reacceleration in earnings growth in the context of easing regulatory worries would serve as an important catalyst for the shares. As for valuation, the analysts remarked, “We are assuming coverage of Apollo Group with a Neutral rating and a $46 12-month price target, based on 8x CY11E EPS of $5.72.”