S&P Downgrades Washington Post (WPO) From Buy to Hold – Just in Time for Bounce-back

S&P downgraded Washington Post WPO from Buy to Hold, Friday. The downgrade comes a little late as the stock has fallen from 541 in April and is trading up 2.24% to around 375. today. The stock fall is related to Washington Post's Kaplan division which is under scrutiny by the federal government for tuition reimbursement rule changes. The news that private universities would undergo stricter rules for government tuition reimbursement has been out for some time. Analysts say that Kaplan is Washington Post's most profitable division. It looks like S&P has already missed the boat on this one. Here are a few quotes from the report: “Our downgrade is based on valuation and reflects a less favorable risk/reward profile. We believe risks have increased as the company is exposed to not only an unfavorable shift within the publishing industry as ad spending moves online from print, but also to the possible loss or restriction of government funding in Kaplan schools, from potential federal rule changes. However, we see EPS benefiting in the near term from an improved cyclical ad environment and increased political ad spending. We keep our target price of $411, based on our EV/EBITDA analysis./J.Agnese”