Morgan Stanley Underweight On ITT Educational Services (ESI)

Morgan Stanley has an Underweight rating and a $55 price target on shares of ITT Educational Services ESI. In a note to clients, Morgan Stanley writes, "We've collaborated with our Accounting & Valuation team, led by Greg Jonas, to come up with an overview of PEAKS, ESI's unaffiliated, off-balance sheet loan program. Our goals were to 1) normalize earnings for PEAKS to compare ESI to peers on an apples-to-apples basis, 2) address how to properly model the future cash flow impact, and 3) understand the accounting and rationale behind the structure." Shares of ESI gained $2.21 yesterday to close at $78.81, a gain of 2.9%.