Friday, FBR Capital Markets initiated coverage of Corinthian Colleges Inc. (COCO) stock with a Market Perform rating and a price target of $15.
Although analyst Matt Snowling views Corinthian's valuation as relatively attractive, his cautious investment rating stems from his expectation of decelerating enrollment growth and regulatory changes that likely will limit near-term upside potential.
Specifically, the analyst is concerned about elevated student defaults and Title IV receipts approaching statutory limits that will likely cause enrollment levels to drop going forward.
Over time, the analyst expects that the company's strong cash flows will support enough investment in growth initiatives to compensate for what we expect to be a more difficult and expensive operating environment in the future. Meanwhile, the analyst recommends waiting for either a better entry point in the name or more clarity regarding potential regulatory changes.
Currently, COCO is down $0.21 or 1.53% and trading at $13.52.
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