Wednesday, Credit Suisse initiated coverage of Education Management Corp. (EDMC) stock with a Neutral rating and a price target of $22.
Analyst Flynn thinks EDMC's wide array of degree and disciplinary offerings, coupled with its young campus network and still relatively small online platform, increases the company's addressable market and growth prospects. These factors, coupled with significant remaining margin opportunity, due partly to weight of recent investments, lead the analyst to model a 20%+ 3-5 year net income CAGR off 2009.
The analyst thinks EDMC is subject to sector regulatory risks. However, the analyst believes the company's 35+ years of operating history, relatively clean regulatory track record, below industry average student loan cohort default rates, and solid 86%-90% graduate job placement rates mitigate these risks.
The analyst believes that EDMC's relatively low exposure to the most cyclical Diploma category (~7%) and broad mix of program disciplines make its fundamentals somewhat less countercyclical than most publicly traded peers'.
The analyst said that private loans/internal lending programs funded ~14% of fiscal 2009 revenue. Management expects this to decline to ~9% for fiscal 2010, but the analyst thinks this still relatively high exposure subjects EDMC to risks related to credit market turmoil, loan defaults, and Washington constituents' concerns about the burdens of high student loan balances.
Currently, EDMC is down $0.93 or 4.17% and trading at $21.39.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.